Copper Surges 3.5% On Greek Deal

Feb 21, 2012 NEW YORK (Dow Jones)--Copper futures posted strong gains Tuesday as investors cheered that Europe finally extended a second bailout package to Greece.

The most actively traded contract, for March delivery, jumped up 12.85 cents, or 3.5%, to settle at $3.8365 a pound on the Comex division of the New York Mercantile Exchange.

European finance ministers sealed the long-awaited second Greek rescue deal early Tuesday. The accord, worth around EUR130 billion, will help the debt-laden country avoid a disastrous default and aims to set it on the path to a more sustainable debt load.

"The global markets heaved a collective sigh of relief today and dealers pressed the BUY button following the overnight news that conditions had been agreed to enable Greece to receive its second bailout payment," said traders at Sucden Financial.

Dollar-denominated copper contracts also drew strength from a stronger euro, which boosted their appeal to investors using other currencies by making the assets seem less expensive.

Comex, which was closed in observance of Presidents Day on Monday, also played catch-up to China's decision on Saturday to cut bank reserve requirement ratios by 50 basis points. The credit loosening measures are aimed at boosting business activity and considered a sign that Beijing is more concerned with restarting growth than curbing incessantly high inflation.

China is the world's largest consumer of copper and traders closely watch its economic and fiscal policy for any shifts that affect future demand. Copper is widely used in construction and manufacturing as it easily conducts electricity and doesn't rust when exposed to water.

Elsewhere, operations at the world's third-largest copper mine, Chile's Done Ines de Collahuasi, were halted Tuesday following a fatal accident at its concentrator plant, a spokeswoman said. Operations won't resume until an investigation into the accident is completed. Collahuasi is controlled by Anglo American PLC and Xstrata PLC.

Copper settlements (ranges include electronic and pit trading):
Mar $3.8365; up 12.85 cents; Range $3.7240-$3.8445
May $3.8445; up 12.85 cents; Range $3.7325-$3.8530