Sep 27, 2011 NEW YORK (Dow Jones)--Copper futures rebounded sharply Tuesday, as hopes that Europe would take coordinated steps to shore up the region's finances drew buyers to perceived risky assets such as commodities and equities.
The most actively traded copper contract, for December delivery, rose 16.45 cents, or 5%, to $3.4475 a pound on the Comex division of the New York Mercantile Exchange.
Asian and European markets showed strong gains Tuesday, and benchmark U.S. indexes opened higher. Industrial bellwether crude oil was recently up 3.3% on the Nymex.
Reports this week have raised hopes that the euro zone will bolster its rescue fund in an effort to stabilize the currency union's struggling financial sector. 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.
"A few days ago, we were really worried that we might be falling into a recession in the Western world, with officials not willing to do anything" to prop up the global economy, said Bart Melek, head of commodity strategy with TD Securities. "Now there's optimism that they are willing to do something."
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.
Metals with industrial applications plunged last week, as investors cut their view of global growth and likely demand for raw materials. The selling was also fueled by the view that the world's central banks and governments lacked the will or ability to forestall a renewed economic crisis.
Copper was also due for a bounce, analysts said, falling 22% in September through Monday's close as manufacturing data from China, the U.S. and Europe pointed to weakening activity. Futures early Monday slid to 14-month lows.