Aug 11, 2011 (Dow Jones) -- --September futures settle up 12 cents, or 3.1%, at $4.0085 a pound

--Copper follows equities higher

--Stronger yuan gives futures a boost

--More gains may be needed for sustained recovery in copper

By Amy D'Onofrio
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Copper futures recovered Thursday from recent losses as an appreciation of China's currency and a rally in equities boosted trader sentiment.

The benchmark contract settled above $4 for the first time since Friday, as futures have struggled to rise following the U.S. credit downgrade and mounting economic worries.

The most actively traded contract, for September delivery, rose 12 cents, or 3.1%, to settle at $4.0085 a pound on the Comex division of the New York Mercantile Exchange. Thinly traded August-delivery copper settled up 11.9 cents, or 3.1%, at $4.0045 a pound.

Stronger metal demand in Asia overnight added to the market's gains, with copper benefiting from China's yuan rising to a new high against the dollar.

"A stronger domestic currency makes copper purchases cheaper, because it gives you greater buying power in overseas markets," said Justin Lennon, analyst with Mitsui Bussan Commodities.

Better-than-expected U.S. jobless claims data lifted equities, and copper followed higher. The number of people claiming new jobless benefits fell last week to the lowest level in four months, according to the Labor Department.

The Dow Jones Industrial Average, which has whipsawed between extreme gains and losses in recent days, was up nearly 400 points during early afternoon trading.

"Copper is truly an industrial metal and it's following the Dow Jones Industrial Average quite closely," said Scott Meyers, senior trading analyst with Pioneer Futures.

Traders watch for indicators of economic growth, as a weaker economy could spell less demand for consumer goods that use copper, from cars to computers.

The metal moved in sync with equity markets, but with a technical view the copper market's disposition is "still absolutely slanted to the downside," said Ralph Preston, an analyst with Heritage West Financial Inc.

He called Thursday's move a temporary "bounce," and said futures need to close over $4.09 to hint at a sustained recovery.

Copper settlements (ranges include electronic and pit trading):

Aug $4.0045; up 11.9 cents; Range $3.8855-$4.0260
Sep $4.0085; up 12.0 cents; Range $3.8885-$4.0360