Wednesday, 27 February 2013 09:57
SINGAPORE: London copper rose on Wednesday after the US Federal Reserve reassured investors of its commitment to monetary stimulus, helping prices pull away from two-month lows hit the session before.
Three-month copper on the London Metal Exchange had climbed 0.50 percent to $7,898 a tonne by 0318 GMT, adding to small gains from the previous session.
Copper prices fell to the lowest since Dec 21 on Monday at $7,785, and are sitting in negative territory for the year.
The most-traded June copper contract on the Shanghai Futures Exchange advanced 0.45 percent to 57,570 yuan ($9,200) a tonne.
"Bernanke's comments helped to build sentiment," said Singapore-based analyst Dominic Schnider at UBS.
The new leadership in top metals consumer China will take more stimulus steps as the second quarter unfolds, Schnider continued, helping to firm copper prices. That would outweigh any drag on the country's exports if parliamentary deadlock in Italy delays a eurozone recovery, he added.
"For us, the sell-off is a buy."
Fed Chairman Ben Bernanke strongly defended the US central bank's monetary stimulus before Congress on Tuesday, easing financial market worries over a possible early retreat from bond purchases.
Italy's stunned political parties searched for a way forward on Tuesday after an inconclusive election gave none of them a parliamentary majority and threatened prolonged instability and a renewal of the European financial crisis.
Strengthening appetite for risk was reflected in a rebound in Asian shares on Wednesday, tracking US stocks higher, while the yen held near one-month peaks.
"We believe that base metals in general would remain vulnerable to selling ahead of the PMI manufacturing data (for China) out on Friday," Standard Bank said in a note.
"Following the weak Flash PMI number for China, and in line with our view, there seems to be some nervousness in the market about the sustainability of base metal rallies in general."
A narrowing price differential between London and Shanghai copper was helping to underpin turnover and LME copper's price rally, traders said.Copyright Reuters, 2013