Copper rises on supply concern, US debt talks weigh

NEW YORK/LONDON: Copper prices rose on Thursday on healthy US economic data and supply worries after a declaration of force majeure at the world's biggest copper mine, but uncertainty over US debt talks capped gains.

Benchmark copper on the London Metal Exchange ended at $9,815, up from a close of $9,780 on Wednesday. In New York, the key September COMEX contract advanced by 2.30 cents to finish at $4.4695 per lb.

The metal, used in power and construction, hit a session high of $9,851 a tonne after data showed pending sales of existing US homes unexpectedly rose in June.

Better-than-expected weekly US jobless claims added support to copper's price rise.

Chile's Escondida copper mine, which extracts 7 percent of the world's copper, declared force majeure on copper concentrate sales on Wednesday after a six-day strike hit output.

"On one hand, copper is under pressure due to the debt limit discussions in the US and a stronger dollar, but on the other hand prices are supported by the strike at Escondida," Daniel Briesemann, an analyst at Commerzbank, said.

A prolonged strike at Escondida could push a global shortfall of copper concentrate deeper into deficit this year, driving smelting and refining charges lower.

A bill to cut the US budget deficit faced a nail-bitingly close vote in Congress on Thursday, as the top Republican lawmaker sought to quell an internal party revolt and push his plan to avoid a ruinous default.

Copyright Reuters, 2011