Copper moves higher

Copper rose on Friday as optimism on the US economy and on Europe's initiatives to tackle the euro debt crisis helped the metal add to a sharp rise in the previous session and stage its biggest weekly gain in nearly three years. Three-month copper on the London Metal Exchange (LME) closed at $8,175 versus $8,145 a tonne at the close on Thursday. Earlier, the metal used in power and construction rose to as high as $8,280 a tonne.
"We're constructive towards metals. We still think the fundamental story is very strong, and we are not surprised or concerned that there is some consolidation," said Nikos Kavalis, commodity strategist at RBS Global Banking & Markets. On the EU debt deal, he said: "Regardless of whether there are questions, what it has done is give the market breathing space to focus on commodity-specific issues."
Euro zone leaders struck a deal on Thursday to contain the region's debt crisis and are now under pressure to finalise the details of their plan to slash Greece's debt burden and strengthen their rescue fund. LME copper prices have gained about 14 percent this week, the largest weekly increase since January 2009. Copper lost about a quarter of its value in the three months to end-September, making it one of the worst performers among commodities during the period.
On China, which accounts for about 40 percent of the world's copper demand, he noted: "Chinese data is still reasonably solid. I struggle to see where the softening Chinese economy is. It's not in the data. Copper prices were also underpinned by this week's declaration of force majeure on some concentrate sales from Freeport's strike-hit Grasberg mine in Indonesia - the world's second-largest copper mine. Confirming improving demand for copper, inventories at warehouses monitored by the LME fell for a sixth consecutive day, by 2,300 tonnes to 432,375 tonnes, data showed.
Copper stocks have fallen by about 8 percent this month. Material for next-day delivery has been getting harder to come by and is trading at a discount of only $2.50 to the three-month benchmark contract - its narrowest since March. In the broader markets, global stocks, seen as a proxy for economic growth, headed for their best week in over two years on Friday, but the euro eased from the seven-week peak it struck after the debt deal.
A poorly subscribed Italian bond auction showed some investors have yet to be convinced the region's problems are on the way to being solved. Looking ahead, Federal Reserve policymakers will meet next week to discuss ways to help boost the US economy and lower the unemployment rate, a move that may propel markets further. Denting sentiment a touch, US data showed civilian employment costs rose much less than expected during the third quarter as wages and salaries posted their weakest growth in a year, while benefits expanded at their slowest pace since 1999. Among other metals, zinc, used in galvanising, closed at $1,980 a tonne from $1,945 at Thursday's close, while soldering metal tin closed flat at $22,050.
Helping underpin tin was news that smelters in top exporter Indonesia are likely to continue a stoppage of ingot supplies into December, as they try to push benchmark prices above $25,000 a tonne. Lead was $2,090 from $2,039, aluminium at $2,242 from $2,255 and nickel was $19,700 from $19,900.