SHANGHAI, Oct. 10 (SMM) –The European debt crisis failed to improve during China's National Day holiday period, still dampening market sentiment. However, LME copper prices rallied to above USD 7,200/mt from a low at USD 6,636/mt, climbing as high as USD 7,385/mt, due to better-than-expected manufacturing indexes in all countries and positive US non-farm payrolls. After Fitch downgraded Spain and Italy's credit ratings Friday, LME copper prices fell from earlier highs, narrowing previous gains and closing at USD 7,292/mt, still an increase of 4% for the week. LME copper prices fell by nearly 25% during September.

German and French leaders said at a meeting held on October 9th that they would reach an agreement before the end of October on a comprehensive solution in order to stabilize the Euro-zone area, easing the Euro's declines. Comex copper prices and gold prices tended to rally this morning. Nevertheless, LME copper price trends later will be dominated by bearish sentiment due to the credit downgrade of Euro-zone countries by Fitch and Moody's and after the two credit ratings agencies put Portugal and Belgium's credit ratings on view for possible downgrade. Therefore, LME copper prices will likely test the 5 and 10-day moving averages at the low-end, with prices expected between USD 7,130 -7,350/mt during today's Asian trading hours. Chinese stock markets will fall after opening higher today, which will drag down SHFE copper prices. Coupled with sell-off pressures from investors with greater risk appetites, SHFE 1112 copper contract prices will move between RMB 53,500 -55,000/mt. In Chinese spot markets, downstream producers are expected to make large stockpiling on Tuesday and are likely to take a wait-and-see stance today, while SHFE 1110 copper contract prices will be traded between discounts of negative RMB 50/mt and premiums of positive RMB 80/mt.