SHANGHAI, Feb. 22 -- Copper jumped in Shanghai as it resumed trading after the Lunar New Year holiday, tracking gains in London, which last week rose the most in seven months on an improved U.S. economic outlook.
The May-delivery contract on the Shanghai Futures Exchange climbed as much as 6.4 percent to 60,000 yuan ($8,789) a metric ton, this highest level since Jan. 26. It traded at 59,110 yuan by 10:37 a.m. local time. Copper for three-month delivery on the London Metal Exchange fell 1.2 percent to $7,340 after climbing 9.1 percent in the week ended Feb. 19, the biggest weekly gain since July.
London copper last week advanced after reports showed U.S. industrial output and home-construction starts rose last month, easing concern that the economic recovery may falter. The metal gained even as the U.S. Federal Reserve increased the discount rate for the first time in more than three years, and China raised bank reserve requirements for the second time in a month.
"A slew of good-looking economic data from the U.S. has boosted optimism, which offset impact of monetary tightening policies," Zeng Chao, an analyst at Everbright Futures Co., said from Shanghai today.
Shanghai zinc increased as much as 6.2 percent to 19,480 yuan a ton and traded at 18,880 yuan at 10:39 a.m. local time. London zinc fell 2.9 percent to $2,296 a ton at the same time. China's markets were shut last week.
"Zinc's gain is following copper, albeit at a softer pace due to its weaker fundamentals," said Chen Jian, an analyst at Minmetals Haiqin Futures Co., from Beijing.
"With last week's advance, London copper appears to have done with a recent correction and have regained upward drive" Chen said today.
Still, the gains in the dollar may constrain copper's climb, said Everbright's Zeng. The U.S. currency rose last week against most of its major counterparts as the Federal Reserve's rate increase damped investor appetite for riskier assets.
Copper, used in homes and power grids, tumbled earlier this month to the lowest since October as tightening policies in China, rising job losses in the U.S. and widening deficits in Europe fueled investor concern that the pace of the global economic recovery is slowing. China and the U.S. are the world's largest consumers of the metal
Aluminum in London slid 0.2 percent to $2,135 a ton, lead lost 1.6 percent to $2,321 a ton and nickel slid 1.3 percent at $20,450 a ton. Tin was yet to trade as of 10:42 a.m. in Shanghai.