Copper at two-week high

Copper hit two-week highs on Thursday, as prospects of a peace plan for Libya sent oil prices lower and reduced fears about inflationary threats to global growth, and as the euro jumped versus the dollar. Three-month copper on the London Metal Exchange hit a session high of $9,979, its highest since mid-February. Untraded at the close, it was last bid at $9,910 a tonne from a last bid of $9,889 on Wednesday.
Brent crude futures for April, which rose to a 2-1/2 year high around $120 last week on tensions in oil-producing Libya, fell to around $114 a barrel after the Arab League said a peace plan for country was under consideration. Also raising sentiment was data showing new US jobless claims last week at their lowest level in over 2-1/2 years, while the US services sector grew at a slightly faster pace in February to another five-year high.
"We have copper rising on the back of US data and a slight dip in oil prices," said Carl Firman, an analyst at Virtual Metals, but he added the market "can turn very quickly."
Tensions have run high in markets since a wave of unrest has spread across the Middle East and North Africa this year, with industry officials estimating the uprising against Libyan leader Muammar Gaddafi has reduced the country's oil production by around half. "There's some feeling that, with this talk about mediation potentially in Libya, things might settle down a bit," said Daniel Smith, an analyst at Standard Chartered. Stocks of copper in LME warehouses rose 500 tonnes at 424,050 tonnes, the highest level since July last year and continuing a trend since the middle of December, providing evidence of diminishing demand.
The growing piles of metal have moved the copper curve into a $15 contango - a discount for cash over three-month material - from a $70 backwardation, or the premium for cash over three-month material, in mid-December. Aluminium stocks fell 5,475 tonnes to 4,598,950 tonnes but remained within reach of a record high 4,640,750 hit in January 2010. Aluminium, untraded in rings, was last bid at $2,611 from $2,603 a tonne. Zinc closed at $2,512 from $2,480 a tonne and battery material lead was at $2,619 from $2,564 a tonne. Tin was at $31,650 from $31,600 a tonne and nickel closed at $28,860 from $28,600 a tonne.