Oct 12, 2011 NEW YORK (Dow Jones)--Copper futures pushed higher Wednesday as investors took an optimistic view of the latest developments in the euro zone, with a top official set to release further plans to stem the currency union's debt crisis.
Copper for December delivery, the most actively traded contract, was recently up 9.35 cents, or 2.8%, at $3.384 a pound on the Comex division of the New York Mercantile Exchange.
European equities and other perceived risky assets received a boost Wednesday after European Commission chief Jose Manuel Barroso said he would announce proposals to steady the currency union's ailing banking system and strengthen its economic governance. A better-than-expected reading on euro-zone industrial production data also lifted growth-sensitive metals.
Metals are poised to move higher over the short term, "teeing off the better tone in the equity markets and cautious optimism that some sort of comprehensive package will come out of Europe," MF Global analyst Edward Meir said in a note. "Although this may not necessarily 'fix' the debt crisis, it could hopefully convince investors that the politicians are recognizing the seriousness of the issues they face by bringing the appropriate financial muscle to the table."
The copper market was under intense pressure beginning in September as investors cut their expectations for global growth and a European credit crunch seemed increasingly likely. Copper is vulnerable to shifts in economic sentiment because of its widespread uses across industries, and traders have been watching for signs that the strain in financial markets was filtering down to the industrial economy.
Copper spent much of Tuesday in negative territory, as investors were cautious ahead of a closely watched vote on an expanded euro zone bailout fund. Slovakia, the only EU member that had yet to approve the backstop designed to prevent a crippling credit crunch, debated the proposal for hours before ultimately voting it down after copper's settlement.
Slovakian political parties are holding talks to hold a repeat vote.
Developments in supply and demand in the copper market have held little sway over prices recently. Investors have placed bets largely based on the latest view of the global economic scene, looking past ongoing labor strikes at large mines in South America and Southeast Asia that threaten to limit already tight supplies of the metal.