NEW YORK/LONDON, March 17 (Reuters) - Copper ended up on Thursday in its biggest one-day rally since November as buyer interest,
particularly from China, began to percolate after Japan's nuclear crisis drove prices down to three-month lows this week.
Signs of economic acceleration in the United States added to the bullishness, helping give a boost to broader market sentiment, which had been hit hard as Japan's nuclear catastrophe unfolded.
While developments at Japan's quake-hit nuclear plant remained a main source of worry for investors, encouraging demand signals from the world's largest copper consumer brought the metal's bullish fundamental story back into the spotlight.
"Buying has picked up and we have seen some pretty solid clips of Chinese buying, which has been absent for a while," said Nicholas Snowdon, analyst with Barclays Capital in New York.
"Consumers in China are clearly price-sensitive right now ... down in the $9,000's ($4.08 per lb), seemingly that's when consumers start to come into the market."
London Metal Exchange (LME) three-month copper CMCU3 rallied $305, or 3.3 percent, to end at $9,565 per tonne -- its biggest one-day advance since Nov. 4.
COMEX May copper HGK1 rallied 3.5 percent, or 14.65 cents, to settle at $4.3440 per lb, near the upper end of its $4.1460 to
$4.3630 session range.
Since hitting all-time highs at $10,190 per tonne in London and $4.6575 per lb in New York last month, prices have surrendered more than 12 percent of their value as rising inflation in China, tensions in the Middle East, and Japan's situation all threw the sustainability of the global recovery into doubt.
As London and New York markets unraveled, China began to make its move, analysts said. "We have seen the spread strengthen, which is another positive sign that appetite is picking up in China, particularly down at these levels," Barcap's Snowdon said.
Sentiment received a further boost from the People's Bank of China, after it signaled it may not raise interest rates or bank reserve requirement ratios immediately.
Positive signs from the U.S. economy included a drop in claims for new unemployment benefits and an expansion in Mid-Atlantic factory activity at its quickest rate in 27 years.
Other data showed U.S. consumer prices rose at their fastest pace in more than 1-1/2 years in February, but underlying inflation pressures stayed generally contained.
STOCKS ON THE RISE, AGAIN
An inflow of 1,825 tonnes of LME copper stocks kept a mostly bearish inventory trend in place since last December. At 428,800 tonnes, stockpiles stand at their highest level since July. MCU-STOCKS
But in another sign of improving spot demand, copper's contango, or discount for cash over three month material, narrowed to $2 MCU0-3 on Thursday. Last week, the discount deepened to $18. Still, demand has not rebounded enough to challenge last December's $70 backwardation, or premium for cash over three-month material.
In other metals, LME aluminium stocks MAL-STOCKS fell 1,050 tonnes to 4,619,400 tonnes, but a record-high 4,640,750 tonnes hit in January 2010 remained well within reach.
Aluminium CMAL3 ended up $65 at $2,523 a tonne.
Metal Prices at 1845 GMT
COMEX copper in cents/lb, LME prices in $/T and SHFE prices in
Metal Last Change Pct Move End 2010 Ytd Pct
COMEX Cu 434.55 14.80 +3.53 444.70 -2.28
LME Alum 2523.00 65.00 +2.64 2470.00 2.15
LME Cu 9564.00 304.00 +3.28 9600.00 -0.38
LME Lead 2651.00 71.00 +2.75 2550.00 3.96
LME Nickel 25900.00 950.00 +3.81 24750.00 4.65
LME Tin 29350.00 750.00 +2.62 26900.00 9.11
LME Zinc 2333.00 45.00 +1.97 2454.00 -4.93
SHFE Alu 16525.00 -130.00 -0.78 16840.00 -1.87
SHFE Cu* 69810.00 -770.00 -1.09 71850.00 -2.84
SHFE Zin 17790.00 -580.00 -3.16 19475.00 -8.65