SINGAPORE: London copper firmed on Friday and was set to close higher for a second straight week after US jobs and inflation figures showed further signs of economic recovery, but prices were capped as high stockpiles in China discouraged buyers.
Three-month copper on the London Metal Exchange rose 0.47 percent to $7,836.75 a tonne by 0701 GMT. Copper is set to close the week up around 1 percent, but still remains in negative territory for the year, having dropped more than 6 percent from a peak in early February.
The most-traded July copper contract on the Shanghai Futures Exchange rose 1.04 percent to close at 57,130 yuan($9,200) a tonne, having hit 57,320 earlier in the session, the highest since Feb. 28.
"We see copper fully priced where it is at the moment," said analyst Matt Fusarelli at consultancy AME Group in Sydney.
"We are expecting a surplus this year of copper and we are now up several hundred thousand tonnes since the start of the year, indicative of where the market is moving," he added.
ShFE and LME copper stocks have climbed more than 200,000 tonnes, or more than a quarter of combined total stocks so far this year.
AME expects prices to ease over the second quarter and close the year around $3.20 a pound ($7,055-$7,275 a tonne).
But for now, copper prices are drawing support from promising data from the United States.
The number of Americans filing new claims for unemployment benefits dropped for a third straight week last week, the latest indication the labor market recovery was gaining traction.
A second report from the Labor Department offered little reason to worry about a rise in inflation, with food prices at the wholesale level almost reversing January's increase and the cost of automobiles rising only marginally.
Other data on Thursday showed a spike in the cost of gasoline pushed up producer prices last month, but a lack of broad price pressures gives the Federal Reserve scope to maintain its very easy monetary policy.
European stock index futures pointed to a slightly higher open on Friday as investors positioned for another batch of strong US economic data.
"Ahead of today's consumer price index release from the United States, the market will be watching closely whether quantitative easing (QE) has impacted inflation," Mizuho Corporate Bank said in a research note.
"The Fed has a target inflation of around 2.0 percent. Should CPI numbers post a big gain then it will be another round of USD buying, which would provide further consolidation to the belief that QE will be ending," the bank said.
Any increase in the dollar could weigh on metals prices as a firmer dollar typically erodes demand for commodities priced in the greenback by making them more expensive for holders of other currencies.
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