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CORRECT: BASE METALS: Stronger Equity Markets Lift Copper Above $4/lb
Aug 15,2011 09:39CST
industry news
Source:SMM
Copper futures finished above $4 for the second consecutive day as a stronger stock market stirred up risk appetite.

Aug 12, 2011 (Dow Jones) -- ("BASE METALS: Stronger Equity Markets Lift Copper Above $4/lb" published at 2:32 p.m. EDT misstated the weekly percentage losses and mischaracterized price movement in the eighth paragraph. The correct version follows.)

--Comex September copper settles up 0.35 cent, or 0.1%, at $4.0120/lb

--Rebound in equities lures investors back to riskier assets like copper

--Traders wary that copper could mimic declines in stocks

--Codelco CEO expects copper prices to trade around $4 until year end

By Tatyana Shumsky
  Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Copper futures finished above $4 for the second consecutive day as a stronger stock market stirred up risk appetite.

Copper for September delivery, the most actively traded contract, settled up 0.35 cent, or 0.1%, at $4.0120 a pound on the Comex division of the New York Mercantile Exchange.

The front-month contract, for August delivery, gained 0.50 cent, or 0.1%, to settle at $4.0095 a pound.

The U.S. equities market looked set to lock in a second day of gains, giving copper prices a boost from early in the day. The Dow Jones Industrial Average was trading at 11,298.9, up 155.2 points on the day, as copper trading closed on the Comex floor.

"It will continue to take cues from the equities market and if panic starts to set in and people continue to sell, copper will fall victim to that as well," said Matt Zeman, head of trading at Kingsview Financial in Chicago.

Copper prices often move in step with equities markets as both are considered leading indicators of economic growth. Copper is widely used in consumer goods like iPhones and cars, and prices tend to slump as demand for such products falters.

Moreover, copper futures, like equities, are considered a risky investment because investors may see greater returns than offered by U.S. Treasurys, but they run the risk of greater losses.

Copper lost 2.6% this week, adding to the 8.1% correction in prices logged in the prior week, even as risk appetite made a slow return to the market.

Earlier in the day, copper drew strength from a weaker dollar. Dollar denominated contracts like Comex futures appear cheaper to investors using foreign currencies when the dollar eases.

"With the dollar down, it may keep some sellers out of the market," said Sterling Smith, analyst with Country Hedging.

The world's largest copper mining company, Chilean state owned Corporacion Nacional del Cobre (Codelco), remains optimistic that copper prices will hold at current levels despite volatility, the company's chief executive told La Tercera newspaper.

"Although prices fell, they've held above $4 a pound so we expect for prices to hold at current levels through the end of the year," Diego Hernandex told reporters.

Copper settlements (ranges include electronic and pit trading):
Aug $4.0095; up 0.50 cents; Range $4.0015-$4.0245
Sep $4.0120; up 0.35 cents; Range $3.9810-$4.0630

 

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