Copper eases

Copper eased on Friday as China took monetary tightening measures that could affect demand for industrial metals, but a cease-fire in Libya and a G7 intervention to calm market nerves helped boost risk appetite. Three-month copper on the London Metal Exchange closed at $9,510 a tonne, down from Thursday's close of $9,565.
China's central bank raised lenders' required reserves for the sixth time in a cycle of monetary tightening. "This is definitely taking the sheen off the market," said Standard Bank analyst Stephen Reece. "The fact that this is the sixth time that China's bank intervenes is more important than the fact that it is a 0.50 point increase only." But some said the impact of Chinese tightening measures would be moderate in the longer term.
"China is taking some moderate measures to cool down the economy. This may have a negative impact in the near term, but we don't think it will derail China's growth in terms of base metals," Credit Suisse analyst Stefan Graber said. "China's metals demand will continue to grow robustly this year." News that Libya declared a cease-fire in the country to comply with a United Nations resolution passed overnight boosted market confidence.
"The cease-fire in Libya provided some sort of support to the market and certainly there has been a lift," said Daniel Major, an analyst at RBS. "In the near term less military action is always taken as positive. Earlier, the Group of Seven agreed on joint intervention to curb the soaring yen and calm markets over Japan's nuclear power plant crisis.
"There is a rebound in risk appetite, but it's being limited by what is going on in the Middle East," Danske Bank analyst Christin Tuxen said. In Asia, traders cited renewed Chinese buying. Investors have lamented a dearth of buying by China as the world's top copper consumer has dashed market hopes by not returning to the market as expected after its New Year holiday in February. Stocks of copper in LME warehouses last rose 850 tonnes to 429,650 tonnes, data showed.
Aluminium finished at $2,560 from $2,523 a tonne. LME stocks of the metal used in transport and packaging last fell 6,575 tonnes to 4,612,825 tonnes, but a record-high 4,640,750 tonnes hit in January 2010 remains within reach. Lead, untraded in rings was bid at $2,675 from $2,651 a tonne. Tin closed at $29,400 from $29,375 a tonne. Zinc ended at $2,325 from $2,333 a tonne. Nickel finished at $26,750 from $25,925 a tonne. Somali pirates hijacked a nickel cargo ship owned by shipping firm PT Samudera Indonesia, a director of the firm said.