Copper Advances, Buoyed by Rebound in Global Equity Markets

LONDON, Sept. 4 -- Copper rose for a second day in New York as gains in global equity markets fueled optimism that demand for industrial metals will rise.

    The Shanghai Stock Exchange Composite Index jumped 4.8 percent, the most since March. An expanding Chinese economy helped copper to post eight straight monthly gains this year. The Standard & Poor's 500 Index added as much as 0.7 percent. Copper prices have soared 75 percent since March 9 as the S&P surged 48 percent from its lowest level since 1996.

    "Copper is getting support from the gains in equities," said Michael Gross, an OptionSellers.com trader in Tampa, Florida. "The market is getting a bounce from positive sentiment."

    Copper futures for December delivery rose 3.9 cents, or 1.4 percent, to $2.865 a pound on the New York Mercantile Exchange's Comex division. Prices rose 0.3 percent yesterday.

    The metal fluctuated between gains and losses earlier today, reflecting swings in U.S. equities. Copper fell as much as 1.5 percent earlier as initial U.S. jobless claims topped forecasts and a report showed U.S. service industries contracted for the 11th straight month, dimming the outlook for metals demand.

    Copper is headed for its first weekly decline since mid- July on concern that the global economic recovery may stall. Today's gain in equities in China helped to reassure traders that an economic recovery continues in the world's largest metals consumer.

    Equity-Market Concern

    "Copper fell earlier this week because of concerns about losses in stock markets," said Stephen Briggs, an RBS Global Banking & Markets analyst in London. "Now, broader markets have improved, and today's gains on the London Metal Exchange show there's huge investor appetite for metals."

    On the LME, copper for delivery in three months rose $81, or 1.3 percent, to $6,255 a metric ton ($2.84 a pound).

    Any decline in copper prices is a "buying opportunity," Morgan Stanley said in a report, calling it "our preferred base metal." The bank's advice stems from a "relatively pessimistic view on Chinese production, a positive view on consumption growth and the restraining effects of strategic inventory-buying on the apparent domestic market surplus."

    Among other LME metals, lead, zinc, aluminum, tin and nickel prices all rose.

    (Source: Bloomberg)