LONDON: Copper rose to four-month high on Thursday, spurred by hope the International Monetary Fund will boost its resources to help combat the euro zone debt crisis, and optimism that demand for metal will hold up as US economic prospects brighten.
Benchmark copper on the London Metal Exchange (LME) rose to $8,365 tonne in official rings, from a close of $8,235 on Wednesday.
Earlier in the session the metal used in power and construction hit to its highest level since Sept. 20 at $8,410 a tonne.
"The market is trading on a stronger footing today after gains in equity markets and positive macroeconomic data from the United States," said Daniel Briesemann, analyst at Commerzbank, referring to upbeat US factory output data released on Wednesday. "We are continuing to see robust global demand against the backdrop of debt crisis in the euro zone and that is remarkable."
Financial markets were boosted by news the IMF is seeking to more than double its war chest by raising $600 billion to help the euro zone pull out of its two-year-old sovereign debt crisis. Also helping gains in metals prices was a stronger euro against the dollar.
The euro was supported by a solid response to Spanish and French debt auctions and with an improvement in risk appetite spurring investors to unwind bearish positions.
A weak dollar makes commodities priced in the US unit cheaper for holders of other currencies. Optimism gathered pace that Greece would reach an agreement with its creditors as the indebted country enters a second day of bargaining on a crucial bond swap deal.
"The market is more focused on the uncertainty about the Greek crisis rather than fundamentals (for metals). We still have to wait and see how the negotiations regarding the Greek debt plays out," Briesemann said.
Spain passed its biggest test of market sentiment so far this year on Thursday, raising hopes of revival in demand for debt from other parts of the euro zone's struggling periphery.
Copper prices fell by around 21 percent last year, the first annual drop since 2008, as an uncertain global economic outlook raised fears about the metal's demand prospects. The metal is trading around 10 percent higher so far this month.
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