Jan 12, 2012 NEW YORK (Dow Jones)--Copper futures climbed to the highest point in more than two months Thursday on hopes for steady Chinese demand and cautious optimism toward the euro-zone after successful debt auctions and upbeat comments from the European Central Bank chief.

The most actively traded copper contract, for March delivery, rose 10.3 cents, or 2.9%, to settle at $3.649 a pound on the Comex division of the New York Mercantile Exchange, the highest settlement price since Oct. 28.

The year-on-year rise in Chinese consumer prices slowed slightly in December from November's pace, the National Bureau of Statistics said Thursday, likely giving Beijing more room to ease monetary policy to support the economy.

Easy availability of credit tends to give metal consumers more flexibility in financing their copper purchases, and the metal's 23% decline in 2011 came in part on worries that Chinese demand would falter as the country tried to clamp down on inflation.

Copper prices have trended higher since their late-2011 lows, "and we see further strength in the months ahead," Standard Chartered analyst Dan Smith said in a note. New mine supply remains slow to come online, he said, and "demand growth should pick up, led by China and other Asian countries."

Copper futures were also supported Thursday as the euro gained against the dollar after a pair of successful euro-zone debt auctions. Italy and Spain, whose rising borrowing costs late last year spooked investors, each borrowed at rates well below the previous auction.

The euro climbed against the dollar in response and growth-sensitive metals followed suit. A weaker dollar can boost dollar-denominated copper by making the futures appear cheaper for buyers using other currencies.

ECB President Mario Draghi said while risks to the euro-zone economy remained, the bank's crisis-fighting measures were showing signs of staving off a more severe credit crunch.

Prices for copper and other industrial metals have closely tracked developments in the euro-zone's debt crisis, as a credit crunch there could slam the industrial economy. Copper is used in everything from plumbing and wiring to consumer electronics, making it sensitive to the economic outlook.

Copper futures initially pared their gains Thursday after disappointing economic data from the U.S. Readings on retail sales and weekly jobless claims came in worse than expected, stoking concerns the apparent strength in the world's largest economy in recent weeks could have been because of seasonal factors.

Copper prices have jumped 6% so far this week, and some analysts say the gains may be the result of a temporary boost as index funds designed to track commodity prices undergo an annual shift. The adjustments in the major U.S. commodity indexes officially began Monday and end Friday.

Morgan Stanley analysts estimate the copper's increased role in the Dow Jones-UBS Commodities Index would lead funds tracking that benchmark to buy a combined 7,238 Comex copper contracts, equal to about 6% of the total amount outstanding in the market at the end of 2011.

Copper settlements (ranges include electronic and pit trading):
Jan $3.6440; up 10.25 cents; Range $3.6025-$3.6450
Mar $3.6490; up 10.30 cents; Range $3.5220-$3.6710