NEW YORK/LONDON, July 7 (Reuters) - Copper ended higher on Wednesday, reversing earlier losses and extending a bounce from last week's two-week low, with the help of a weaker dollar and rallying U.S. equity markets.
Copper for September delivery HGU0 on the COMEX metals division of the New York Mercantile Exchange rose 4.40 cents, or nearly 1.5 percent, to settle at $3.0150 per lb, near the upper end of its $2.9435 to $3.0270 range.
Scott Meyers, senior trading analyst with Pioneer Futures in New York, said momentum has been building in the COMEX copper market since last week, when prices tested and held key technical support.
"The June 18 low at $2.8630 (per lb) coupled with the July 1 low ($2.855) ... it's a perfect double-bottom," he said.
On the London Metal Exchange, copper for three-months delivery CMCU3 was untraded in the rings but was last bid at $6,640/6,645 a tonne versus a last bid of $6,604 a tonne on Tuesday.
"These (gains) are really going to be contingent on the stock market to remain healthy, and that is questionable at best," Meyers said.
Markets began the day in a negative mood, falling under the weight of revived economic recovery concerns reflected in the Institute for Supply Management's reading on U.S. service sector activity on Tuesday and worse-than-expected German manufacturing
orders data on Wednesday.
Euro zone economic growth in the first three months of 2010 was confirmed at 0.2 percent quarter-on-quarter.
But sentiment recovered as the session wore on, with traders pegging support to a positive open on Wall Street and renewed weakness in the dollar, traders said.
"The dollar's topped out and has weakened and copper's really just following that," said RBC Capital Markets trader Randy North. "A few shorts are covering because it's traded up to the 30-day moving average."
The dollar .DXY index surrendered earlier gains, making industrial metals cheaper for non-U.S. currency holders. [FRX/]
In the very short term, North believed copper would be stuck in a range between $6,300 a tonne and $6,900 a tonne, with a risk to the downside in the medium term on the back of growth concerns in Europe and in China, the world's top copper consumer.
"But for the long term, we're still bulls," North said. Offering support were continuous declines in LME-registered warehouses.
Stocks of copper have fallen steadily since mid-February, last dropping 2,350 tonnes to below 440,000 tonnes.
Giving the demand outlook a pick-me-up, French car maker PSA Peugeot Citroen (PEUP.PA) posted a 16.9 percent rise in first-half sales, helped by strong growth in China.
Aluminum stocks have also fallen this year, down from a record above 4.6 million tonnes, but on Tuesday rose 4,700 tonnes to 4,409,550 tonnes.
Aluminum CMAL3 eased $8 to end at $1,985 a tonne, while zinc CMZN3 eked out a $3 gain to $1,853. Lead CMPB3 was bid at $1,795 a tonne from $1,780.
Tin CMSN3 rose $50 to $17,650 a tonne and nickel CMNI3 climbed $200 to $19,200 a tonne. Premiums for physical nickel in Europe will likely come under pressure following a tentative agreement to end a year-long strike at Vale's (VALE5.SA) Sudbury, Ontario, mining operations, traders said.