Jun 11, 2012 (Dow Jones) NEW YORK--Copper futures ended higher Monday as investors breathed easier after Spain requested financial aid from the European Union.
The most actively traded contract, for July delivery, rose 5.80 cents, or 1.8%, to settle at $3.3430 a pound on the Comex division of the New York Mercantile Exchange.
Copper futures had ended on a 2012 low Friday on worries that Spain, the fourth-largest economy in the euro zone, was struggling to prop up its bank system.
These concerns were assuaged over the weekend after the Spanish government requested EUR100 billion ($125 billion) in rescue aid for the country's banks.
"I don't know if the bailout package is going to be big enough to save Spain. Europe is a big guessing game right now," said Frank Lesh, broker and futures analyst with FuturePath Trading.
Copper is used to make electrical wires and pipes, and is widely in automotive production, general manufacturing and construction. Investors have been worried that if Europe's debt problems spread, they will sap economic growth and damp demand for raw materials like copper.
Copper prices also were helped higher as traders who bet on lower copper prices returned to the market as buyers to close those positions, Mr. Lesh said.
"There's always some bargain hunters in there, but it's mainly just shorts covering that's holding the market up there for the moment," Mr. Lesh said.
The euro climbed against the dollar, giving copper prices an added boost. Copper is traded in dollars and becomes cheaper for investors using other currencies when the dollar weakens, attracting more of these buyers to the market.
Elsewhere, Goldman Sachs and Societe Generale reduced their forecasts on a range of base metals Monday, citing risks posed to the complex by the euro-zone debt crisis.
Goldman Sachs now sees copper for three-month delivery traded on the London Metal Exchange to average $8,000 a metric ton, from $9,000 a ton previously. Meanwhile, Societe Generale reduced its full-year copper price forecast to $8,000 a ton from $8,220 a ton.