LME copper steadies, eyes fourth week of gains

SINGAPORE: London copper futures steadied on Friday after losses in the previous session as investors weighed progress in efforts in the United States and euro zone to avoid a debt default against a brittle global economic recovery.

Private-sector growth in the euro zone ground to a halt this month and China's factory sector contracted for the first time in a year, surveys showed on Thursday, deepening evidence of a global slowdown.

Worries about the global economy thinned the positive impact of news that euro zone leaders have agreed on a bold rescue package for debt-stricken Greece and efforts in the United States to craft a broad $3 trillion deficit-reduction deal.

"The news out of Europe was somewhat positive for global growth but I think a lot of that had been priced into these markets," said Ben Westmore, commodity economist at National Australia Bank.

"For base metals, it seems the weaker macroeconomic data has a bigger influence."

Three-month copper on the London Metal Exchange gained $5 to $9,690 a tonne by 0715 GMT, after trading in a tight range of $9,640 and $9,703.75.

LME copper is up 0.2 percent for the week, marking its fourth straight week of gains, after rising to three-month highs on Tuesday.

The most-active October copper contract on the Shanghai Futures Exchange rose 40 yuan to close at 72,190 yuan per tonne.

There is also concern that the US government's plan to cut spending could lead to slower copper demand, analysts said.

Discussions in the US are centering on a plan for $3 trillion in deficit cuts over 10 years, a figure that many in Washington hope would help salvage the United States' triple-A credit rating. Rating agencies have called for a comprehensive deficit-cutting deal.

Technical charts suggest the LME copper may have begun a medium-term downtrend.

An immediate target for LME copper is set at $9,587, the intra-day low touched on July 15, said Reuters market analyst Wang Tao, adding that a fall below that level will open the way towards $9,480.

But tight supplies are helping copper stay at the current level which is just $500 away from the record high of $10,190 reached in mid-February.

Union workers at the world's top copper mine, Chile's Escondida, started a 24-hour strike on Thursday over a series of wage contract demands that if not met could lead to an indefinite work stoppage, union leaders told Reuters.

In Indonesia, Freeport McMoran Copper & Gold said the aggregate impact of production lost during an eight-day strike at the Grasberg mine in Papua province was 35 million pounds of copper and 60,000 ounces of gold.

The world's refined copper market saw a deficit of 69,000 tonnes in the January to April period, the International Copper Study Group said on Thursday, and analysts expect the shortage to widen for the rest of the year.

Traders said supply risks should continue to support the industrial metal as mine workers push for better pay deals with copper staying near historic highs.

Copyright Reuters, 2011