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METALS-NY copper buoyed by relief rally on stronger euro
July 25, 2012 / 10:09 AM / 5 years ago

METALS-NY copper buoyed by relief rally on stronger euro

 (Adds New York dateline, byline, COMEX prices and comment)
 * Traders fears bounce will be short-lived
 * Euro jumps after ECB's policymaker comments
 * COMEX copper will test support at $3.24 - analyst
 By Josephine Mason and Silvia Antonioli
 NEW YORK/LONDON, July 25 (Reuters) - Copper prices in New York bounced back
from one-month lows on Wednesday, snapping three days of losses as a rally in
the euro against the dollar and hopes for more Federal Reserve stimulus more
than offset deepening gloom over the euro zone.
 The market tracked a broad comeback across commodities as the euro recovered
from two-year lows even as focus remained on a darkening debt outlook for Spain
and other countries that use the single currency.
 In New York, the COMEX September copper contract rose 2.15 cents, or
0.64 percent, to settle at $3.3745 per lb, after hitting a one-month low of
$3.332 in the morning.
 "This is a bit of a relief rally. Even in the face of poor earnings and
data, the U.S. market optimism is unabashed," said Sean McGillivray, head of
asset allocation at Great Pacific Wealth Management, referring to
weaker-than-expected Apple Inc earnings and housing data that revealed
the biggest drop in U.S. single-family home sales in more than a year.
 Benchmark three-month copper on the London Metal Exchange traded at
$7,440.50 a tonne in official rings or 0.3 percent up from Tuesday's close of
$7,417. Prices earlier fell to $7,344.25, the lowest since June 27.
 Downbeat data bolstered expectations that the Fed will soon take further
steps to stimulate the ailing U.S. economy, the world's largest. 
 But with the need for additional measures reflecting underlying economic
weakness, many viewed Wednesday's optimism as premature and predicted the bounce
would be short-lived.
 "The trend is still lower, growth expectations are lower, underpinned by
optimism with the thought of stimulus, but the (Fed's) accommodative policy has
so far been ineffective," McGillivray said.
 Some called it a "dead-cat bounce", slag for a small but temporary rally
that follows significant declines.
 "I think it'll come back down," said a New York-based metal analyst, adding
that he expects copper to test $3.24 per lb, just below the lows seen in June.
 POCKET OF STRENGTH
 While underlying sentiment was gloomy, the bulls pointed to more upbeat news
out of China. Minmetals Resources Ltd, a unit of the country's biggest
metals trader, predicted that new stimulus spending by the world's largest
copper consumer would help lift the global copper market.
 That outlook was cemented by a research note from influential Goldman Sachs
metals analysts, who said they expect activity at Chinese copper fabricators and
end-users to improve in the second half of the year after six months of painful
destocking.
 The report, which followed a trip to China, struck a relatively encouraging
note on the strength of demand from copper-intensive sectors, with cable sales
estimated to have grown 5-12 percent in the first half due to property sector
growth and power grid investment.
 It cautioned, though, that air-conditioning output growth ranged from a drop
of 10 percent to a rise of 8 percent year-on-year in the first half.
 Even so, the report came a day after HSBC data showed the country's
manufacturing output in July grew at its fastest pace in nine months.
 
 "We expect recent aggressive rate cuts as well as fiscal stimulus to produce
results and help to boost economic activity towards the end of the third
quarter," VTB Capital said in a research note.
 "Beijing's efforts to stimulate the economy will, in our view, bring growth
rates back to highs near 8 percent."  
 
 RANGEBOUND
 Copper drew strength from a jump in the euro on comments from European
Central Bank policymaker Ewald Nowotny that he could see grounds for giving the
euro zone bailout fund a banking license that would increase its crisis-fighting
firepower. 
 While the news prompted a flurry of short-covering, analysts fretted that
the market might have put too much emphasis on the comment given ECB opposition
to date.
 A weaker U.S. unit makes dollar-priced commodities such as metals cheaper
and therefore more attractive for holders of other currencies. 
 In other metals, tin traded at $17,770 from $17,525 and zinc
, used in galvanizing, at $1,810 from $1,797 at Tuesday's close.
 Battery material lead was untraded in rings but bid at $1,864 from
$1,860 and aluminium, also untraded, was bid at $1,880 from $1,869.
 Nickel traded at $15,755 from $15,750. 
 In industry news, LME shareholders voted in favor of a $2.2 billion offer by
the Hong Kong stock exchange for the British institution, the world's largest
industrial metals marketplace.    
 
 Metal Prices at 2001 GMT
                                                                    
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                           move
  COMEX Cu       338.85        3.55     +1.06     343.60     -1.38
  LME Alum      1870.00        1.00     +0.05    2020.00     -7.43
  LME Cu        7446.00       29.00     +0.39    7600.00     -2.03
  LME Lead      1855.00       -5.00     -0.27    2035.00     -8.85
  LME Nickel   15850.00      100.00     +0.63   18710.00    -15.29
  LME Tin      17340.00     -185.00     -1.06   19200.00     -9.69
  LME Zinc      1801.00        4.00     +0.22    1845.00     -2.38
  SHFE Alu     15260.00     -140.00     -0.91   15845.00     -3.69
  SHFE Cu*     53910.00     -790.00     -1.44   55360.00     -2.62
  SHFE Zin     14360.00     -170.00     -1.17   14795.00     -2.94
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
 
 (Editing by Dale Hudson and Alison Birrane)
 

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