Jun 29, 2012 (Dow Jones) NEW YORK--Copper hit a five-week high Friday as European Union agreements to help the region's banks sent commodities soaring.

The most-actively traded copper contract, for September delivery, rose 16.5 cents, or 4.9%, to settle at $3.4965 a pound on the Comex division of the New York Mercantile Exchange. This is the highest settlement price since May 21.

Euro-zone leaders announced at the EU Summit in Brussels they would use regional bailout funds to assist banks directly, rather than forcing countries to take on more sovereign debt. The euro zone will also appoint a single supervisor to oversee the region's banks.

The news from the summit gave investors optimism that struggling euro-zone nations may be headed toward recovery. Yields on Italian and Spanish government bonds fell in response, while equities rose.

Copper, which has widespread uses in manufacturing and construction, is sensitive to shifts in economic outlook. "Copper being an economic indicator, it's pretty obvious why we're seeing this jump significantly today," said Joe Kobel, commodities broker at RJO Futures.

The euro was recently up 1.7% at $1.26590 against the dollar. A weaker dollar boosts dollar-denominated copper, making it less expensive for traders using other currencies.

However, the euro zone's actions may not be sufficient to rescue the region's struggling economies. The EU summit only brought the euro-zone "one step closer to putting a Band-aid over a stab wound," Kobel said, adding that global growth should be the real focus for investors.

Economic data in the U.S. remained sluggish. The University of Michigan's consumer sentiment index fell to its lowest reading since December. Consumer spending was flat in May for the first time in six months, while incomes and personal savings rates increased.

"As far as copper goes, I don't see it sticking around where it's at," Kobel said. "Today was a pretty happy spike."

Copper settlements (ranges include electronic and pit trading):
Jul $3.4900; up 16.4 cents; Range $3.4280-$3.4930
Sep $3.4965; up 16.5 cents; Range $3.4345-$3.4995