NEW YORK/LONDON: Copper edged up in choppy trade Thursday on hopes Greece will abandon plans to hold a referendum over a euro zone debt bailout and after a surprise rate cut from the European Central Bank instilled greater confidence.
Copper recovered from earlier losses and pushed into positive territory late alongside a stronger rally in global equities, as risk sentiment improved after the ECB rate cut and upbeat US data suggested there has been a modest improvement in the labor market.
But conditions remained volatile as broader markets reacted to the headlines out of Europe and comments from the new ECB president. Traders sided with caution in front of a monthly US jobs report on Friday which is expected to show nonfarm employment increased by 95,000 last month.
"At the end of the day what the world economy is going to do is the number one fundamental, but we're inundated with conflicting stories that make it hard to read," said BNP Paribas analyst Stephen Briggs.
London Metal Exchange (LME) benchmark copper was last bid at $7,910 a tonne versus Wednesday's closing level at $7,885. Earlier, it hit a session high of $7,960 after the ECB announced a surprise rate cut by a quarter point to 1.25 percent.
In New York, the key December COMEX contract edged up 0.75 cent to settle at $3.5885 per lb, after moving in a session range between $3.4740 and $3.6090.
In a cloud of uncertainty surrounding Europe's fiscal health, trading volume remained thin. A little more than 58,000 lots changed hands in late New York business, more than 10 percent below the 30-day norm, according to preliminary Thomson Reuters data.
The ECB rate cut came as concerns over the EU debt crisis outweighed rising inflation worries, with the Greek government teetering on the brink of collapse amid anger over Prime Minister George Papandreou's call for a referendum on an EU bailout package.
"We are probably going to see a lot more rate cuts from the ECB going into year-end," said Rob Kurzatkowski, futures analyst with OptionsXpress in Chicago. "Inflation is kind of on the back-burner right now. Growth trumps everything."
A Papandreou spokesman said earlier the ruling party is ready to hold talks with the opposition on its demand for a caretaker government to be set up until snap elections can take place.
The opposition as well as some government lawmakers want to force through approval of a euro zone bailout and prevent a disorderly default -- a move which should be taken positively by markets including metals.
SUPPLY SQUEEZE
From a supply point of view, things looked price positive. Declining copper ore grades and strikes at some of the largest copper mines have cut supply significantly this year.
"The fundamentals should support copper and other metals: inventories have been falling across the board lately, Chinese imports are healthy and canceled warrants have been rising, but commodity markets at the moment are almost ignoring fundamentals; they are politically driven," Commerzbank analyst Daniel Briesemann said.
Freeport McMoRan Copper & Gold's massive Grasberg mine in Indonesia is producing copper at 5 percent of its full capacity, a senior official at the energy and mineral resources ministry said.
A decline in metals stocks and a rise in canceled warrants in the last few weeks underlined demand for industrial metals was still robust.
Copper inventories in LME-monitored warehouses fell by 1,150 tonnes to 422,125 tonnes, their lowest levels since February. Inventories have fallen about 10 percent in the last five weeks.
Comments
Comments are closed for this article.