METALS-Copper hits highest in a month on dollar, U.S. optimism
(Updates prices, adds U.S. GDP, comments)
* Aluminium, zinc touch seven-week highs as metals rise
* Fiscal cliff solution could spur year-end rally
* U.S. GDP expands at 2.7 pct annual rate, beats expectations
LONDON, Nov 29 (Reuters) - Copper rose to its highest in more than a month on Thursday as the dollar fell and the euro rose on signs the bloc's debt crisis had started to ease and on optimism U.S. lawmakers will agree a deal to avert higher taxes and spending cuts. The U.S. economy also grew faster than initially thought in the third quarter, helping to lift investor sentiment. World equities hit a three-week high and U.S. stock futures pointed to further gains. Three-month copper on the London Metal Exchange touched an intraday peak of $7,943 a tonne, the highest since Oct. 23, and was up 2.1 percent at $7,930 at 1454 GMT. Aluminium and zinc each touched seven-week highs. Copper, which fell half a percent on Wednesday, has gained about 5 percent since touching a two-month low of $7,506 on Nov. 9 after worries about weak demand and potential for the U.S. fiscal cliff to send the world's largest economy back into recession. Analyst Duncan Hobbs at Macquarie in London said a year-end rally was possible if positive headlines on the global economy and top metal consumer China keep emerging. "If we continue to see positive macro-economic data and the U.S. politicians avoid the fiscal cliff, that would be supportive and there might be enough momentum to carry the price into the early $8,000s, that's perfectly plausible," he said. Investors took heart after U.S. House of Representatives Speaker John Boehner voiced optimism that Republicans could broker a deal with the White House and a conservative congressman said he would back an agreement with President Barack Obama to raise rates on the rich. U.S. gross domestic product expanded at a 2.7 percent annual rate, the Commerce Department said, as export growth also helped to offset the weakest consumer spending and first drop in business investment in more than a year. The euro rose for a second straight day against the dollar, boosted by the potential U.S. deal and positive news in Europe. A weaker dollar makes commodities like copper priced in the U.S. currency cheaper for holders of other currencies. Italy's 10-year borrowing costs hit a two-year low at a sale of debt on Thursday, helped by the view that a deal this week on Greek debt has eased pressure on other highly indebted euro zone countries A Europe survey also showed that economic morale in the euro zone improved for the first time in almost a year in November. The market could also get a fillip on Monday after China's official purchasing manager's index is published over the weekend, which is expected to show factory activity in November expanded at its fastest pace in seven months.
"Underlining that, (copper) stocks are pretty light generally speaking and access is not always easy even when stocks exist. You could argue that is also constructive for early next year," Hobbs added. LME copper stocks <MCUSTX-TOTAL> are down by a third this year. Still, there was concern by some analysts that underlying physical demand for metals was still sluggish as the world economy fights to gain momentum. Senior metal executives in China said consumption of copper cathode is likely to grow more slowly there next year, cooling further after the pace of growth looks set to drop by at least a third this year. "We cannot get too excited about copper though as it really continues to trade within a well worn range seen throughout this year," RBC said in a research note.
ALUMINIUM TIGHTNESS On the LME, the premium of the December aluminium contract over January <CMALZ2-F3> crept up to a high of $16, up from only $4.50 a week ago, as a major long and short holders continued to face off. LME data <0#LME-FBR> shows one party controls 20-29 percent of December aluminium contracts, while two short holders have positions each making up 5-9 percent and 10-19 percent of the market. Triland Metals said in a note that large warehouse stock movements and warrant cancellations were expected as the parties manoeuvre ahead of December's contract expiry on the third Wednesday of the month. Three-month aluminium rose 2.5 percent to $2,052 per tonne, breaking above the 200-day moving average and touching the highest level in seven weeks. It closed at $2,000 on Wednesday. Norwegian aluminium group Norsk Hydro said the market outside China could grow 2-4 percent next year after this year's 2 percent rise.
Zinc climbed 2.3 percent to $2,033 per tonne, also the highest in around seven weeks, from $1,987 at the close. Lead added 2.6 percent to $2,245 from $2,188, edging above resistance at the 100-day moving average of $2,232. Nickel rose 1.5 percent to $17,235 a tonne from $16,980 and tin gained 1.3 percent to $21,700 from $21,425.
Metal Prices at 1507 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2011 Ytd Pct
COMEX Cu 361.00 7.85 +2.22 344.75 4.71 LME Alum 2051.00 51.00 +2.55 2020.00 1.53 LME Cu 7924.75 144.75 +1.86 7600.00 4.27 LME Lead 2243.25 55.25 +2.53 2034.00 10.29 LME Nickel 17214.00 284.00 +1.68 18650.00 -7.70 LME Tin 21700.00 275.00 +1.28 19200.00 13.02 LME Zinc 2033.00 46.00 +2.32 1845.00 10.19 SHFE Alu 15375.00 -15.00 -0.10 15845.00 -2.97 SHFE Cu* 56370.00 140.00 +0.25 55360.00 1.82 SHFE Zin 15165.00 70.00 +0.46 14795.00 2.50 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Additional reporting by Susan Thomas; Editing by Alison Birrane)