NEW YORK: Copper rose 1.4 percent on Monday in thin, volatile trade, tumbling near a two-week low and then bouncing back, with investors selling on an uncertain political outlook in Europe, then buying on expectations for a second-half upturn in Chinese demand.
The London Metal Exchange (LME) was closed for a bank holiday, which made volume lighter and price swings more pronounced as copper kept near its lowest levels of the year.
Copper shed as much as 1.5 percent early, after Greek and French election results over the weekend undermined investor confidence in the euro zone's ability to contain its festering debt crisis. Other assets perceived as risky like crude oil and global equities also sank.
In New York, the benchmark July COMEX contract bottomed at $3.6665 per lb, its cheapest since April 24, then rebounded sharply to finish up 5.25 cents, or 1.4 percent, at $3.7735 per lb.
"The uncertainties that have emerged in Europe are going to contribute to a downside bias to the trading range," said Nicholas Snowdon, analyst with Barclays Capital in New York.
"But ultimately, we are still in a phase where this tension between current softness in Chinese demand and the expectation of an ultimate improvement in conditions there in the second half of the year is keeping us in a relatively range-bound market for the majority of base metal prices."
COMEX copper's early losses tracked weaker Asian prices. The Shanghai Futures Exchange's most-active August copper contract dropped 1.2 percent to close at 57,590 yuan ($9,100) a tonne.
COMEX copper volumes slowed to just 39,000 lots in late New York trade, half the 30-day average, according to Thomson Reuters preliminary data.
Copper was initially hit by worries that Francois Hollande's triumph over Nicolas Sarkozy in France's presidential election could ignite a clash between Paris and Germany on how to better lead the bloc out of its financial crisis. France's president-elect has criticized Germany's heavy emphasis on austerity and called for policies to revive economic growth.
Political risks were also mounting in Greece, where voters angry at years of austerity shrugged off the risk of a euro zone exit and punished their ruling parties, which failed to win enough votes to form a ruling coalition in Sunday's general election.
European risks and China's growth outlook compounded the macro uncertainty about the strength of the US economy following Friday's weaker-than-expected US jobs report, leaving metals investors with little conviction.
In the days leading up to the release of the data, the market had been increasingly confident, the latest Commodity Futures Trading Commission (CFTC) showed on Friday.
In the week to May 1, money managers, including hedge funds and other large speculators, raised their bullish bets in copper to the largest amount in four weeks.
"This continues to reflect how challenging it is to have a strong directional view given the tension of the near-term softness in China and the expectation of a macro improvement there later this year," Barcap's Snowdon said.
The markets will now focus on Chinese trade data due Thursday that should provide better insight into demand from the world's largest consumer of the red metal.