Jun 27, 2012 (Dow Jones) NEW YORK--Copper futures climbed to a one-week high Wednesday, taking cues from upbeat economic data and hopes that the European Central Bank might take steps to support growth.
The most-actively traded copper contract, for July delivery, rose 3.65 cents, or 1.1%, to settle at $3.3495 a pound on the Comex division of the New York Mercantile Exchange, the highest ending price since June 20.
U.S. durable-goods orders in May recorded their first gain in three months, the Commerce Department said Wednesday, a sign that the manufacturing sector stabilized a bit after slowing down earlier in the year. Orders for long-lasting goods such as automobiles and televisions rose 1.1%, beating expectations for an increase of 0.4%.
An index of pending sales of existing homes also beat expectations, rising to the highest point since April 2010 and suggesting that the U.S. housing market was continuing to recover.
The data helped to push copper futures higher. Copper is used in a wide range of industrial applications, including electronics, cars and trucks and home appliances, making prices sensitive to such economic data.
The housing number in particular "was considerably better than the market expected this morning," said Bart Melek, head of commodity strategy with TD Securities. "Certainly, since copper is very much used in construction, we can say that markets expect a bit of a turnaround."
Futures were also supported by reports that a key European Central Bank official hinted the central bank was preparing to lower interest rates next week. The ECB has largely held to its previously disclosed crisis-fighting policies this year even as the euro zone's banking crisis worsened. ECB officials have instead pressured national governments to act, and traders said a course change from the bank could prop up investment in perceived risky assets such as commodities.
Europe's struggle to keep its banking system afloat has transfixed copper traders in recent months. A financial crisis in the euro zone could disrupt the flow of trade in copper-heavy goods and potentially further weaken global economic growth.
Copper futures have traded in a narrow range this week, with many investors reluctant to place large bets ahead of a two-day summit of European leaders. The meetings, expected to cover a potential renegotiation of Greece's bailout terms and various proposals to reconfigure governance of Europe's economy, begin Thursday.
"The markets are in 'watch and wait' mode with Europe," said Rob Montefusco, senior commodities broker at Sucden Financial. "Everyone had been expecting global stimulus, but we're not seeing it yet. Policy makers had better put something constructive on the table, otherwise the euro will crash and metals will get sold again."
Copper settlements (ranges include electronic and pit trading):
Jun $3.3155; up 3.10 cent; Range $3.3340-$3.3465
Jul $3.3130; up 3.65 cent; Range $3.2965-$3.3550