Nov 11, 2011 NEW YORK (Dow Jones)--Copper futures rose for the first time in six sessions on Friday, as investors viewed a drop in the U.S. Dollar and a more optimistic outlook for the euro zone after some political shuffling as a good opportunity to buy.
The most actively traded copper contract, for December delivery, rose 8.95 cents, or 2.7%, to settle at $3.4635 a pound on the Comex division of the New York Mercantile Exchange. The gains weren't enough to erase losses earlier this week, and futures ended the week down 2.8%.
Since settling at a five-week high on Oct. 28, benchmark futures fell by 9% through Thursday as investors worried that financial conditions in the euro zone were deteriorating. Copper is sensitive to the economic outlook because of its use in a wide range of industries, and traders worried that Europe's debt crisis would upset physical demand.
But political changes in Italy and Greece lifted market sentiment on Friday, as investors bet that new leaders of the debt-laden countries would take decisive measures to get their debt under control. The euro rose against the dollar Friday, easing pressure on dollar-denominated copper futures by making them appear cheaper for buyers using other currencies. European and U.S. equity markets also rose.
"Everything is so correlated right now, it's all following the euro," said Zach Oxman, managing director at brokerage Trendmax.
Copper futures also drew support from a report showing bank lending in China grew by more than expected in October, raising hopes that Beijing was easing its credit restrictions to prop up the economy.
The Chinese government has reduced the availability of credit during the last year in an effort to fight inflation. Market participants worried that the restrictions would limit the ability of manufacturers to purchase metals.
China accounted for about 40% of world refined copper consumption last year.
Lending and money supply growth "are moving in the right direction for a possible move to easing of monetary policy," Standard Bank analyst Walter de Wet said in a note. "But until substantial easing actually takes place, demand for industrial commodities should remain lackluster."
Copper settlements (ranges include electronic and pit trading):
Nov $3.4620; up 8.95 cents; Range $3.3940-$3.4620
Dec $3.4635; up 8.95 cents; Range $3.3430-$3.4675