Aug 09, 2011 (Dow Jones) -- --Comex September copper up 4.05 cents, 1%, at $4.0020 a pound
--Stronger equities boost appetite for copper, commodities
--Price declines may lure back Chinese buyers
By Tatyana Shumsky
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Copper prices edged towards the $4 mark as modest gains in equity markets encouraged traders to look at other risky assets such as commodities.
The most actively traded contract, for September delivery, was recently 4.05 cents, or 1%, higher at $4.0020 a pound on the Comex division of the New York Mercantile Exchange.
Thinly traded August-delivery copper was up 0.35 cents, or 0.1%, at $3.9610 a pound.
The Standard & Poor's 500-stock index climbed 23.48 points, or 2.1%, as risk appetite crept back into the market in the wake of Monday's 7.6% decline.
Copper prices, which ended Monday trade at a two-month low, are primed for a "substantial rebound," said Edward Meir, base metals analyst with MF Global.
"Markets are now quite oversold, and likely overshot the mark yesterday in terms of the news that triggered the sell-off in the first place," Meir said.
Investors had rushed away from stocks and commodities after S&P cut the U.S. Treasury's credit rating down one notch to double-A-plus. Market participants fear the lower credit score will raise the cost of borrowing for the U.S. government and slow economic growth.
Copper is widely used in everyday goods such as cellphones, laptops and cars, and demand for such products is sensitive to economic gyrations.
Moreover, copper's smaller price tag is likely to attract attention from international buyers, including top consumer China. China's focus on cooling its economy through fiscal tightening has crimped its copper purchases in recent months, as metal prices marched higher.
"These lower prices are a good thing. Many [fast-growing] countries are having to take actions to cool their economies," said Stephen Platt, analyst with Archer Financial.