Copper rose almost 2 percent on Friday and was on track for its first weekly gain in five weeks, spurred by a move this week by central banks to boost liquidity though worries remained about the eurozone debt crisis. Benchmark three-month copper on the London Metal Exchange closed at $7,895 from $7,790 per tonne on Thursday. It hit an intraday high of $7,988.
Trading on the LME was halted for more than an hour on Friday due to a technical fault, with ring, telephone and electronic trading on the select platform affected. A spokesman said the LME was investigating the cause. Copper has gained almost 10 percent this week, spurred by a central bank decision to inject liquidity into a distressed banking system, boosting investor confidence and prices of assets such as base metals.
"This week the big news has been the central bank move to provide liquidity into the money market," said Credit Suisse analyst Stefan Graber. "It has been an important step but more needs to follow; the EU needs to agree on credible measures to reduce debt. There is still uncertainty around."
Lightening the mood, data showed US jobless rate dropped to a 2-1/2 year low and companies stepped up hiring, providing further evidence the economic recovery was gathering momentum. "Once the flurry of activity is out of the way after the numbers, book squaring ahead of the weekend will likely be the feature," RBC Base Metals said in a research note.
Investors are hoping that more convincing measures to tackle the euro zone crisis and prevent the economic environment from deteriorating further will be agreed at the next European Union summit on December 9. The new head of the European Central Bank signalled on Thursday that it stood ready to act more aggressively to fight Europe's debt crisis if political leaders agree next week on much tighter budget controls in the 17-nation eurozone.
Manufacturing data from the United States, China and Europe this week sent mixed signals about the health of the economy. Physical copper demand was reasonable, as a drawdown of inventories in bounded Asian warehouses showed, but until there is a significant improvement of the economic environment consumers are likely to keep their inventories low, analysts said.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 11.6 percent and were also slightly down in LME-monitored warehouses, compared with last Friday. "For base metals to continue to rebound we need to see more positive data from China," Graber said. The medium to long-term outlook for copper is brighter than for other metals as falling ore grades and supply disruptions are pushing the market into a deficit.
For other metals such as nickel though, supply is not as tight, but it has yet to be seen whether material from new projects will come on stream when expected, analysts said. Stainless steel raw material nickel closed at $17,740 a tonne from $16,785, and tin at $19,950 from $20,100. Zinc closed at $2,052 from $2,045 at Thursday's close, and aluminium at $2,130 from $2,145. Lead, untraded at the close, was last bid at $2,105.