Copper rises, boosted by equities

Investors returned to pick up bargains, but broader markets remained fragile ahead of a key Franco-German summit which may offer a solution out of the spreading debt crisis.

Three-month copper on the London Metal Exchange rose 1 percent to $8,950.50 a tonne by 0700 GMT, after losing 0.2 percent in the previous session.

The most-active October copper contract on the Shanghai Futures Exchange rose 1.3 percent to 67,300 yuan per tonne by the close, after falling 0.4 percent in the last session.

"The Chinese copper market has been stable partly due to a calm external market and partly supported by a rebound in equities," China Futures Co analyst Yang Jun.

"Although the sentiment is largely positive, I wouldn't say that there is huge demand for copper now. Users are still spooked by the previous routs and are mindful of the systemic risks still lurking."

US data on Friday was a mixed bag. Retail sales posted the biggest gain in four months in July, but consumer sentiment fell to the lowest level in more than three decades in early August.

Japan's economy contracted at a slower pace than expected in the second quarter as output and exports recovered from the deadly earthquake in March, but a soaring yen and slowing global growth cloud the outlook for an economy emerging from recession.

China's central bank said on Friday it aimed to keep the currency exchange rate relatively stable, but the pronouncement did little to quiet speculation that Beijing would allow swifter yuan appreciation to help stem inflation.

Besides expectations of cheaper dollar-denominated imports into China, this also raised hopes of less need to resort to tightening measures such as the raising of interest rates.

Copyright Reuters, 2011