BASE METALS: Copper Climbs As Equities Rise, Dollar Weakens

Sep 07, 2011 NEW YORK (Dow Jones)--Copper futures rebounded Wednesday from the previous day's one-week lows as stronger global equities markets and increased investor appetite for risk drew buyers to the industrial metal.

The most actively traded copper contract, for December delivery, settled up 7.6 cents, or 1.9%, at $4.1320 pound on the Comex division of the New York Mercantile Exchange.

U.S. equity markets rose Wednesday, spurred by some upbeat corporate news and reports that President Barack Obama's forthcoming jobs plan could amount to a stimulus of between $300 billion and $400 billion during the coming year. Global stock markets have been under pressure for much of the last month from the view that growth in the U.S. and Europe was slowing, and the prospect for renewed government stimulus brightened investor sentiment toward risky assets such as stocks and commodities.

Obama's speech "should give the market much to ponder" and could provide further direction during a week featuring little in the way of major economic data, traders with RBC Capital Markets said in a note.

Metals markets have tracked equities and other outside markets as a proxy for global sentiment in recent weeks, as the shifting outlook on whether the developed world is poised for a renewed recession trumped the influence of supply and demand factors. Copper Tuesday fell to its lowest levels in almost two weeks on worries that the weak U.S. labor market and worsening debt crisis in Europe would sap copper demand.

Copper is particularly sensitive to the growth outlook because of its widespread use in construction and manufacturing.

"With equities markets recovering (Wednesday), that's providing some extra support for the copper market," said Sterling Smith, an analyst with Country Hedging. Smith said a weaker U.S. Dollar also provided the metal with a boost Wednesday.

The Dow Jones Industrial Average was up 1.8% at 11342 at the close of Comex floor trading, while the U.S. Dollar was lower against currencies of some major trading partners on the renewed risk appetite.

Dollar-denominated copper futures can rise as the dollar falls, as the weaker greenback makes the futures cheaper for buyers using other currencies. The ICE U.S. Dollar Index was at 75.608 at the Comex settlement, down from about 75.929 late Tuesday in New York.

Workers at Peruvian copper mining company Sociedad Minera Cerro Verde began a 48-hour strike Wednesday, a union leader said. Workers are demanding higher pay, and threaten an indefinite strike later this month if an agreement is not reached. Cerro Verde is majority owned by Freeport-McMoRan Copper & Gold Inc. (FCX).

Copper settlements (ranges include electronic and pit trading):
Sep $4.1155; up 7.60 cents; Range $4.0580-$4.1180
Dec $4.1320; up 7.60 cents; Range $4.0605-$4.1390