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METALS-Copper rises on dollar, signs of growth in Germany

Susan Thomas
Friday, 22 Nov 2013 | 7:20 AM ET

* Nickel falls more than 2 pct on week as supply mounts

* German business morale rises, Q3 growth moderate

LONDON, Nov 22 (Reuters) - Copper rose on Friday, lifted by a weaker dollar against the euro, signs of growth in Europe's biggest economy Germany and a temporary supply shortfall after a typhoon-hit Philippine smelter halted some shipments.

Copper is recovering from three-month lows touched on Tuesday, underpinned by a fall in physical supply in Asia and expectations China's economic reforms will support an improvement in global demand next year.

Three-month copper on the London Metal Exchange was up 0.6 percent at $7,065 a tonne by 1031 GMT, extending gains from the previous session. It closed at $7,020 on Thursday.

"I think it is mainly due to a slightly weaker dollar and positive economic data out of Europe, and especially out of Germany," Commerzbank analyst Daniel Briesemann said.

German business morale surged to its strongest in a year and a half in November, suggesting Europe's largest economy is gaining steam into the end of the year after growing by a modest 0.3 percent in the third quarter.

The Munich-based Ifo think-tank said on Friday its business climate index, based on a monthly survey of 7,000 firms, rose to 109.3, beating the consensus forecast in a Reuters poll for a rise to 107.7 and surpassing the highest estimate for 108.5.

The increase in the index, which had fallen in October, sent the euro higher against the dollar. A softer U.S. currency makes it less expensive for foreign investors to purchase dollar-priced commodities.

While copper has recovered from a three-month trough touched on Tuesday at $6,910 a tonne, it is still down more than 10 percent for the year.

"I think the risk is clearly on the downside and I don't know what will lift copper significantly at the moment because sentiment out there is still negative," Briesemann said. "We are still lacking convincing data... and I wouldn't be surprised to see it back below $7,000."

While U.S. factory output rebounded this month business activity across the euro zone and at China's manufacturers slowed, surveys showed on Thursday.

The global copper market also swung into a surplus in August, rising after three straight months of a shortfall mostly due to higher production, data from the International Copper Study Group (ICSG) showed.

In the meantime, a disruption in copper supply is also helping to prop up the price after a typhoon-hit Philippine smelter delayed deliveries. China's importers of the refined metal face a shortfall of about 30,000 tonnes this month and next, traders said on Thursday.

Copper futures also reflected a shortfall in supply of the metal, with cash copper swinging to a $4 premium against the benchmark contract on Thursday from a discount of $14 at the start of the week, underpinning prices.

China is giving priority to infrastructure development in smaller cities as part of its reforms, which will help fuel demand for copper, used in power cables, construction and white goods.

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