NEW YORK/LONDON, March 2 (Reuters) - U.S. copper rose 1.8 percent on Tuesday, as a euro rebound against the dollar lifted most commodities while concerns lingered about power supplies to Chile's copper mines after Saturday's earthquake.
The dollar pared gains against the euro and other major currencies and as risk appetite improved on expectations debt-stricken Greece will secure aid.
"The real story is the currencies. It's affecting all commodities. We've had further budget cuts from Greece and the feeling that the EU may move to help them has taken some of the steam out of the U.S. dollar," said Peter Buchanan, commodities analyst and senior economist at CIBC in Toronto.
The euro's rebound strength made dollar-priced commodities like copper a cheaper for foreign buyers.
Copper for May delivery HGK0 closed up 6.15 cents at $3.4115 per lb on the New York Mercantile Exchange's COMEX division. Three-month copper MCU3 on the London Metal Exchange closed at $7,490 a tonne, up $90 from the close on Monday when the metal used in power and construction hit $7,600 a tonne, the highest since Jan. 20.
In after hours trade, 3-month LME copper rose to $7,505.
Supporting industrial metals prices and equity markets was optimism Greece would announce new austerity measures and win European Union financial support.
Worries about Greece have battered the euro in recent weeks.
Ongoing concerns about the continuous supply of power to Chilean mining operations which were briefly shuttered by the 8.8 magnitude earthquake south of Santiago over the weekend, also helped underpin copper prices.
The massive quake impacted about a quarter of output in the country that produces about 35 percent of global mined copper. Mines had restored operations by Tuesday as power resumed at affected sites, but all mines were still not operating at 100 percent and the top
producer's refineries remained shut.
Some analysts worried that copper buyers may have been stockpiling copper after Chile's earthquake at a time when demand had begun to pick up.
Some analysts expect the 2010 global copper balance to remain tight on demand from China and other emerging countries and potential increases in U.S. down the road.
"China holds its national congress next week and may take steps to cool their housing sector. But even with those measures we think the economy is probably going to grow quite strongly this year along with resource demand," said Buchanan.
Countries such as China, India and Japan rely on copper concentrate from Chile to keep their smelters going.
Traders said a shortage of concentrate, if deliveries do not make it to Chile's ports because of damage to roads or railways, could put downward pressure on smelter treatment charges.
"The unfortunate earthquake in Chile, highlights the potential threat to the copper production base from incidents such as this," investment bank Fairfax said in a note.
Traders and analysts are also watching canceled copper warrants – LME stocks already tagged for delivery -- up at 29,800 tonnes from 4,600 tonnes at the start of February, which could be an early indicator of demand picking up.
Aluminium MALKA3 was at $2,168 from $2,143, zinc MZNKA3 rose to $2,255 from $2,220 and lead MPBKA3 to $2,200 from $2,170. Tin MSNKA3 was last quoted at $17,075/17,100 from $17,025 and nickel MNIKA3 rose to $22,240 from $21,450.