Nov 18, 2011 NEW YORK (Dow Jones)--Copper futures rose Friday as some investors viewed supportive moves in currency markets as an opportunity to buy after the previous day's slide to one-week lows.
The most-actively traded contract, for December delivery, rose 1.95 cents, or 0.6%, to settle at $3.402 a pound on the Comex division of the New York Mercantile Exchange.
On the week, futures fell 1.7%, weighed by fears that Europe's debt crisis may be intensifying in Spain and Italy. But the mood was less dire Friday, and some stability in both countries' bond markets supported the euro and took copper higher with it.
The dollar fell against the European common currency, lifting dollar-denominated copper futures by making them appear cheaper for buyers using other currencies. Copper futures have largely tracked the euro in recent weeks as investors use currency markets as proxies for the outlook on the euro zone.
The worry is that a European credit crunch could slam the industrial economy and limit demand for raw materials, and these concerns have overshadowed production shortfalls that threaten to limit copper supply.
"The supply-side fundamentals have, if anything, become even more supportive in recent months," BNP Paribas analyst Stephen Briggs said in a note. "Ore grades continue to fall at key copper mines and there have been long strikes at two of them."
Despite the supply-side support, the investment bank Friday lowered its copper price forecast for 2012 by 2.2%, to $4.03 a pound.
Some market participants expected any upward moves in copper prices in the near term to be fleeting, as fears of a euro-zone credit crunch still hang over the market.
"Even if China data does not disappoint, we think it would be difficult for a recovery in base metals prices to be sustained for long until there is evidence that the situation in Europe has begun to stabilize," analysts with Barclays Capital said in a note.
Copper prices have been supported by the view that demand from China, by far the world's top consumer, may hold steady. But weak readings on Chinese exports, along with still-tight credit conditions imposed by Beijing have tempered that optimism.
"The only reason you're seeing copper up is dollar-based," said Bob Haberkorn, senior market strategist with R.J. O'Brien. "Ultimately, copper looks bearish. Any strength is an opportunity for a good short."
Copper settlements (ranges include electronic and pit trading):
Nov $3.4020; up 2.00 cents; Range $3.3800-$3.4020
Dec $3.4020; up 1.95 cents; Range $3.3310-$3.4405