SINGAPORE: London copper edged up on Friday, bracing to finish the month higher on signs that a recovery in China's economic growth took root in November, although worries over Europe and the United States kept gains constrained.
Three-month copper on the London Metal Exchange rose 0.22 percent to $7,917 a tonne by 0321 GMT, adding to gains from the previous session, when it hit a five-week high.
"Everyone's expectations on the copper market are turning bullish quarter 1. You've got the US housing market starting to pick up, China starting to pick up and reforms next year," said Jonathan Barratt, chief executive of Barratt's Bulletin, a Sydney-based commodity research firm.
Copper prices could yet stage a snap rally going into the end of the year, given low liquidity and supply constraints further out that make the metal one of the top commodities picks for 2013, Barratt said.
"There's a couple of gazillion dollars on the sidelines waiting to park itself. What I worry about is that all of a sudden there will be a rush to the gates for big assets....I think now represents a good time to buy," he added.
Copper hit its highest since Oct. 23 on Thursday. Prices are set to finish November up more than 1.5 percent, bringing year-to-date gains to more than four percent.
The most-traded March copper contract on the Shanghai Futures Exchange climbed by 0.66 percent to 56,760 yuan ($9,100) a tonne, its highest since Nov. 2.
Asian shares edged up on Friday on expectations for a deal to be reached to avoid a US fiscal crisis, but investors wary about taking big positions before the end of the year were likely to take profits on the rises and buy on dips.
The euro was little changed on Friday, having been a key driver in metals' gains this week. A weaker dollar makes commodities priced in the greenback cheaper for holders of other currencies.
The euro came off a one-month high against the dollar on Thursday after House of Representatives Speaker John Boehner dented hopes for a budget deal that could prevent the US economy from slipping back into a possible recession next year.
Boehner said "fiscal cliff" talks with the White House had made no substantive progress and criticized President Barack Obama and Democrats for not getting serious about spending cuts.
In other news that could support metals via currency markets, Germany's parliament will approve a fresh bailout for Greece on Friday in a vote seen as a test of Chancellor Angela Merkel's authority.
There were bright spots in global manufacturing. Japan's industrial output unexpectedly rose in October in a sign the world's third-largest economy may have seen the worst of the effects of weak global trade and a diplomatic row with China.
China's factory activity in November probably expanded at its fastest pace in seven months, reinforcing views that recovery in the world's second-largest economy is entrenched going into the final quarter of the year.
China's official purchasing managers' index (PMI) may have rebounded in November to 50.6 from October's 50.2, data is expected to show at the weekend.
ALUMINIUM OUTPERFORMS
Three-month aluminium hit its highest in seven weeks at $2,074 a tonne on Friday, boosted by a lack of available supply and chart-based buying after it broke through the 200-day moving average at $2,024 on Thursday.
Reflecting an absence of readily available stock, the premium for the December contract jumped to $20 against the January contract on Thursday from $3.75 at the start of the month.
Nearby futures tightness has lifted LME aluminium stocks to successive record highs this week above 5.1 million tonnes and inventory is expected to rise further into year end.
Banks such as JP Morgan and Goldman Sachs and commodities trade houses Glencore and Trafigura that own warehouses have built queues to take metal out, artificially restricting supply and underpinning prices.
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