Copper advances

Copper advanced on Friday as a fall in energy prices calmed worries that inflation could dent global growth, although caution over further Middle East unrest capped gains. Three-month copper on the London Metal Exchange closed at $9,750 a tonne, bouncing by more than 2 percent from $9,505 at the close on Thursday.
The metal used in power and construction had touched $9,311, a near one-month low, in the previous session. "Focus now is on the Middle East," analyst Arne Rasmussen of Danske Bank said. "Definitely the last couple of days we've seen this fear that rising oil prices would dampen global growth, but prices are a bit more stable today, so optimism is returning," he said.
"People are suddenly realising copper below $10,000 might be a bargain." Oil fell from highs on Friday after top exporter Saudi Arabia stepped up supplies, helping push stocks up, although worries that expensive oil might threaten global growth kept those gains in check.
Global markets have been pressured by worries the political unrest in Libya could spread to other major oil-producing countries, causing energy prices to spike at the expense of a fragile global economic recovery. The easing fears over energy prices offset data showing the US economy grew slower than initially estimated in the fourth quarter.
However, news that US consumer sentiment rose to its highest in three years in February boosted risk appetite and the dollar. While a stronger US currency usually dents demand for dollar-based commodities, the correlation has delinked in recent days as markets are driven by perception of risk instead.
"Going into next week, we suspect that downward pressure on oil markets will likely continue, particularly as investors start to discount the likely fall of the Libyan leader," said MF Global in a research note. "This ... should provide a measure of support to both the metals and US equity markets, at least until the next flashpoint appears on the radar."
Inventories of copper on the London Metal Exchange continued to climb, by 4,150 tonnes to 416,825 tonnes, data released on Friday showed. "Current on-warrant LME stocks are now nearly 55,000 above the levels seen in mid-January, with almost all of the increase occurring in Asian warehouses," said Standard Bank in a note.
In general, inventories have been rising in Far Eastern LME locations in recent weeks as metal is diverted from Chinese ports due to demand, which remains lacklustre. However, weekly Shanghai copper stocks fell by 2,961 tonnes, data showed today. Aluminium stocks fell 4,625 tonnes to 4,610,875 but remained within reach of a record high at 4,640,750 tonnes hit in January last year.
Aluminium closed at $2,565 from $2,542. Tin closed at $32,050 from $31,600, tracking back towards record of $32,799 from February 15. Prospects of supply constraints from top exporter Indonesia have attracted investors and added fuel to prices. Indonesia's state-owned PT Timah, the world's largest integrated tin miner, said on Friday that first-quarter production would be lower than expected because of rains and rough seas. Zinc, used in galvanising, was $2,491 from $2,473 at the close on Thursday.
Battery material lead was at $2,515 from $2,500 and nickel was at $28,150 from $27,505. European stainless steel demand appears to be picking up, with around 5,000 tonnes of nickel warrants cancelled over the past two days, and to be drawn down from warehouses in Rotterdam, the latest data showed.