Greece Swap Hopes Buoy Copper After 3-Day Slide

Mar 07, 2012 NEW YORK (Dow Jones)--Copper futures rose for the first time in four sessions Wednesday, boosted by hopes that a successful Greek debt-swap deal would limit the risk of further deterioration in Europe's financial system.

The most-actively traded contract, for May delivery, rose 2.95 cents, or 0.8%, to settle at $3.767 a pound on the Comex division of the New York Mercantile exchange.

Reports on Wednesday said that Greece's proposed debt swap with private creditors continued to draw more participation. Copper and other growth-sensitive commodities such as crude oil gained in response.

Investors have worried that demand from Europe, already weakened as many euro-zone governments implement budget cuts, could falter further, particularly if Greece is unsuccessful in restructuring its debt. Thursday is the deadline for private-sector creditors to sign on to Greece's swap, which is aimed at writing down about half of the country's debt load.

"At this stage, we do not think that things will fly off the rails," said Edward Meir, an analyst with INTL FCStone.

Copper futures had declined for three consecutive sessions, falling 5% through Tuesday's close on worries that demand in China and Europe would slow. Copper is sensitive to shifts in the economic outlook because of its widespread use in plumbing, wiring and consumer electronics.

In China, which accounts for about 40% of global copper consumption, economic growth is expected to slow from the torrid pace of expansion in recent years. Analysts say Chinese demand for metals, previously expected to snap higher after holidays there in January, has been stubbornly low.

"With the safety blanket of Chinese demand having been pulled away for the moment, the market appeared to throw in the towel and reduce risk ahead of the Greek debt swap," Leon Westgate, an analyst with Standard bank, said in a note.

Copper showed little initial reaction to a pair of upbeat but largely as-expected readings on the U.S. economy. Private-sector nonfarm payrolls increased by 216,000 in February, Automatic Data Processing and consultancy Macroeconomic Advisers said, coming in near economists' expectations. A report on productivity during the last three months of 2011 showed growth of 0.9%, meeting the consensus estimate.

Copper settlements (ranges include electronic and pit trading):
Mar $3.7605; up 2.95 cents; Range $3.7095-$3.7775
May $3.7670; up 2.95 cents; Range $3.7140-$3.7860