Sep 27, 2011 NEW YORK (Dow Jones)--Copper futures regained some of the ground lost in last week's selloff Tuesday, rising sharply as some investors saw a buying opportunity, while others were lured back to the market by the view that Europe was on the verge of easing its debt crisis.
The most actively traded copper contract, for December delivery, rose 15.65 cents, or 4.8%, to settle at $3.4395 a pound on the Comex division of the New York Mercantile Exchange.
Copper rose along with commodities and equities Tuesday, as reports that euro-zone leaders may expand the currency union's bailout fund suggested that demand for industrial metals may not fall as much as previously expected. Copper, which is sensitive to the growth outlook because of its widespread use in construction and manufacturing, has closely tracked developments in Europe's debt crisis, as a potential default by a member state could spur a credit crunch that would rattle industrial as well as financial markets.
Industrial metals plunged last week, with copper declining 17% as traders pared their expectations for global growth. Some analysts say the selloff pushed prices too low, as copper supply is widely expected to continue to fall short of demand this year despite the slowdown in developed economies.
Strong growth in Asia "is likely to provide a floor to metals prices--and a buying opportunity for longer-term investors--even if the West slows over the coming months," analysts with Standard Chartered said Tuesday in a research note.
The copper market also received a boost Tuesday from a report from the Federal Reserve Bank of Chicago showing manufacturing output in the Midwest region rose 0.6% in August from a month earlier.
A separate index of manufacturing in the central Atlantic region showed declining activity in September, but an improvement from August's pace of contraction.
Tuesday's gains don't necessarily signal that the pullback in metals is over, said Jimmy Tintle, a broker with Transworld Futures. "This looks like a short-term rally," he said. "The longer-term trend may be down."
Copper was due for a bounce, analysts said, after falling 22% in September through Monday's close as global manufacturing data pointed to weakening activity. Futures early Monday slid to 14-month lows.
Copper settlements (ranges include electronic and pit trading):
Sept. $3.4295; up 15.45 cents; Range $3.4295-$3.4495
Dec. $3.4395; up 15.65 cents; Range $3.2980-$3.4835