Aug 11, 2011 (Dow Jones) -- --Comex September up 12.30 cents at $4.0115 a pound
--Higher yuan exchange rates buoy copper
--Worries about France subside, but traders still cautious
By Amy D'Onofrio
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Copper futures rose Thursday as the appreciation of China's currency overshadowed easing concerns about Europe.
China's yuan rose to a fresh high against the dollar as the People's Bank of China guided its currency sharply higher for the third day this week. The move is widely seen as indicating that Chinese authorities will allow their currency to strengthen at a faster pace than previously thought.
Strength in China's currency, the yuan, helped fuel the rally in base metals overnight, analysts with RBC Capital Markets said in a client note.
China is the world's top consumer of copper, and a stronger currency makes it cheaper to purchase dollar-denominated commodities like copper.
The yuan is playing a factor in the rebound for copper, but the copper market will stay rangebound until equity markets are calmer, said Matthew Zeman, head of trading at Kingsview Financial.
Participants in the copper market are taking a "wait and see" attitude in terms of what happens to equities, he said.
"I think copper is desperately trying to hold this $4 level," Zeman added.
The most actively traded contract, for September delivery, was recently up 12.30 cents, or 3.2%, at $4.0115 a pound on the Comex division of the New York Mercantile Exchange.
The front-month contract, for August delivery, was up 12.20 cents, or 3.1%, at $4.0075 a pound after just two contracts changed hands.
Recent losses have pushed copper below $4 for the first time in more than two months, but futures rose as high as $4.0230 a pound Thursday.
Copper's recovery gathered speed after ratings agencies confirmed France's triple-A credit rating, alleviating concerns that Europe's sovereign-debt problems were infecting the euro-zone's second-largest economy.
Economic worries have weighed on copper prices in recent days. The red metal is widely used in consumer goods like laptops and cars, and demand for these products tends to decline when the economy weakens.