Copper hit its highest in over a week on Thursday as buyers moved back into the metal after Japan's nuclear crisis drove it to three-month lows this week, with positive US data giving an additional lift to prices. London Metal Exchange three-month copper hit $9,565 a tonne, it highest since March 9 after US data. The metal held gains to close at $9,565 from Wednesday's $9,260 close.
Copper used in power and construction tumbled to as low as $8,944.50 on Tuesday as investors dumped risky assets because of the nuclear crisis in Japan - a major manufacturer - following Friday's earthquake and tsunami there. "The risk aversion is not as it was. There is this assumption that conditions will revert back to normal reasonably quickly," Deutsche Bank analyst Daniel Brebner said.
Copper tracked a technical bounce in European equities, after shares in the region shed 7 percent over the past 6 sessions. However Japan's nuclear crisis continued unfolding, keeping markets nervy. "Over the past few days it's become clear that there is decent buying interest at those low prices," Gayle Berry, an analyst at Barclays Capital, said. "There's been some scaled-up buying, with people's fundamental outlook for this year still very positive but (they are) mindful that in the short-term prices are vulnerable to the swings in sentiment."
New US claims for unemployment benefits fell as expected last week, with the four-week moving average touching its lowest in more than 2-1/2 years. The Federal Reserve Bank of Philadelphia said its index of business conditions in the US Mid-Atlantic region rose in March to 43.4 from 35.9 in February.
Meanwhile, rising oil prices that boosted inflation concerns kept alive worries about economic growth, with unrest escalating in oil-exporting Libya and in Bahrain, which is neighbour to top oil exporter Saudi Arabia. "The financial markets remain volatile and nervous as the Japan quake situation is scrutinised in every detail and the MENA (Middle East and North Africa) tensions continue to worry the world's political leaders and economic analysts," Sucden said in a note. The euro hit a 2011 high of $1.4052 after solid demand at a Spanish bond auction and on the view that eurozone interest rates were likely to rise soon. A weaker dollar makes metals cheaper for holders of other currencies.
Stocks of copper in LME warehouses last rose 1,825 tonnes to 428,800 tonnes, their highest level since July. 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.
Aluminium ended at $2,523 a tonne from a close of $2,458. LME stocks of the metal used in transport and packaging last fell 1,050 tonnes to 4,619,400 tonnes, but a record-high 4,640,750 tonnes hit in January 2010 remains within reach. Tin ended at $29,375 from $28,600 a tonne, zinc was untraded but bid at $2,333 from $2,288 a tonne and nickel ended at $25,925 from $24,950 a tonne. Lead ended at $2,651 a tonne from $2,580.