Jul 19, 2012 (Dow Jones) NEW YORK--Copper futures rallied Thursday as hopes of more accommodation from central banks and a stronger tone across commodity futures bolstered investor confidence.
The most actively traded contract, for September delivery, gained 6.05 cents, or 1.7%, to settle at $3.5345 a pound on the Comex division of the New York Mercantile Exchange.
Stronger prices across the rest of the commodities complex helped stir up investor appetite for copper, said Bill O'Neill, a principal with Logic Advisors. Crude oil futures climbed 3.1% to settle at $92.66 a barrel while gold rose 0.6% to $1,580.40 a troy ounce.
"We have a general tone of improvement here," he said.
Moreover, copper inventories held at warehouses in Asia, Europe and the U.S. have been declining in recent weeks, in a sign of tighter markets, Mr. O'Neill said.
A slew of downbeat U.S. economic data struggled to limit copper's rally. Sales of previously owned homes fell 5.4% in June from May, to a seasonally adjusted annualized rate of 4.37 million. The data missed forecasts of 4.64 million.
Meanwhile, the number of Americans filing for unemployment benefits jumped to 386,000 last week, the Labor Department said Thursday. This was more than the 365,000 economists forecast.
The downbeat economic data are drawing more bullish investors to the market, said Matt Zeman, head of trading at Kingsview Financial.
"I think you're seeing people position themselves for more help from the [Federal Reserve]," he said.
A new stimulus package would boost the pace of business activity and lift demand for raw materials like copper.
"The market, in this case, does like bad data," Mr. Zeman said.
Elsewhere, the world's largest copper mining company, Freeport McMoRan Copper & Gold Inc. (FCX) reported a 48% decline in its second-quarter earnings, citing lower revenue and production. Freeport said it is on track to increase its annual copper output by more than 25% during the next three years through expansion of existing mines.
Copper settlements (ranges include electronic and pit trading):
Jul $3.5340; up 6.10 cents; Range $3.4900-$3.5390
Sep $3.5345; up 6.05 cents; Range $3.4695-$3.5450