LME copper steady, eyes first gain in 5 weeks

SINGAPORE: London copper futures steadied on Friday as investors took a breather after big gains earlier in the week that may be sustained if US employment data due later in the day beats expectations.

Copper in London is on course for its first weekly gain in five weeks after prices soared more than 5 percent on Wednesday in their biggest single-day surge in a month when global central banks acted jointly to lend to distressed European banks.

Next on investors' radar is the US nonfarm payrolls which are expected to have increased 122,000 last month after October's 80,000 gain. But a higher-than-expected ADP employment report earlier in the week, which showed US companies adding 76,000 jobs more than forecast, could lead to a stronger nonfarm payrolls, analysts said.

"A large majority of the market is still short and if the numbers are positive, I think there'll be more short covering," said Nirrav Sharma, marketing manager at Singapore-based trading house G-Steelmet.

"Copper prices remain well supported. If there's any risk, the risk is to the upside, the downside is very limited."

Three-month copper on the London Metal Exchange eased 0.1 percent to $7,779.50 a tonne by 0348 GMT.

LME copper fell more than 1 percent on Thursday, as the boost from the liquidity injection to the euro zone fizzled out, as investors realised that far more needs to be done to put the region back on its feet.

That shifted focus to slowing growth in Europe and China, eclipsing even Beijing's move to cut bank reserve requirement for the first time in three years, announced late on Wednesday.

Manufacturing activity contracted in the euro zone and China in November, underscoring the ripple effects from Europe's debt crisis. But the United States bucked the trend, with its manufacturing sector rebounding to its strongest level since June on the strength of new orders.

The most-active February copper on the Shanghai Futures Exchange dropped half a percent to 57,650 yuan a tonne.

Investors are also looking to the next European Union summit on Dec. 9 where officials could adopt more measures to tackle the two-year-old euro zone debt crisis.

The new head of the European Central Bank signalled on Thursday that the ECB stood ready to act more aggressively to fight Europe's debt crisis if political leaders agree next week on much tighter budget controls in the 17-nation euro zone.

"Wednesday's liquidity injection has been a game changer in terms of the technicals, where a number of resistance levels have now been taken out in the metal charts," INTL FCStone analyst Edward Meir said in a note.

"However, the more relevant question is whether or not there has been an underlying shift in the fundamentals, and in this regard, the answer is not as clear-cut."