Shanghai Copper Rises 1% on Econ Optimism, LME Gains

SHANGHAI, July 10 -- Shanghai copper rose nearly 1 percent on Friday, chasing a rally in London the previous day, on better economic prospects, but dealers said trading would be rangebound in the absence of much key economic data.

    Bullish comments from the International Monetary Fund that the global economy was slowly starting to recover from the worst recession since World War Two, news of the largest drop in U.S. jobless claims since December and that Germany may have already emerged from recession helped drive up London copper prices by 3.6 percent in the previous session.

    The U.S. dollar held steady after steep losses following release of the jobless claims data, which eased some nerves about the U.S. economy.

    "The London market is more under influence from other markets, such as dollar and oil. But the Chinese market is more prone to speculative money, which is aplenty these days," said a Shanghai-based trader, adding that Shanghai copper was likely to continue its sideways trend in the short term.

    Shanghai copper rose 0.9 percent to 39,790 yuan a tonne by 0222 GMT, heading for a 0.2 percent dip versus last week.

    The most-active contract also rose 0.9 percent to 39,710 yuan a tonne.

    "A lot of people are still bullish in Shanghai but prices are bound to trade in a range. Rarely does anyone buy once prices rise above 41,000 yuan. When prices drop below 38,000, buying starts," said Li Rong, an analyst with Great Wall Futures.

    The 38,000 yuan level is the 60-day moving average while prices hovered around 41,000 yuan a week ago.

    China's customs is expected to release trade data for June later in the day. June's copper imports are likely to ease from May's record level after Shanghai copper's premium over London collapsed.

    "Although June imports would fall from the May level, the quantity should still be higher than the year-earlier level, exceeding the demand," said Li of Great Wall Futures.

    Copper for three-month delivery gained $20 to $4,910 a tonne, on course for a weekly decline of 1.4 percent.

    Supporting sentiment, LME's copper inventories fell further on Thursday, down 3,375 tonnes to 261,975 tonnes, their lowest level since early November.

    "We likely will finish this week on a stronger note in metals, considering the selling that has gone on for much of the period. Moreover, with little in the way of statistics coming out of the U.S. this week, next week will likely provide the group with more definitive direction," said Edward Meir, an analyst at MF Global, in a research note.

    The Shanghai Futures Exchange is due to release its weekly warehouse data later. Traders and analysts gave a mixed forecast on the change of copper stocks, from minor increase to a fall of a few thousand tonnes.

    (Source: Reuters)