(Updates with closing prices)
By Eric Onstad
LONDON, Feb 5 (Reuters) - Copper prices rebounded to their highest level in more than a week on Wednesday as investors unwound bearish positions after the central bank in China, the world’s biggest metals consumer, pumped stimulus into its economy.
Industrial metals joined broad-based rises across financial markets with investors hoping that the Chinese move would offset any economic damage from the coronavirus outbreak.
Media reports that suggested scientists are closing in on a vaccine for the deadly coronavirus also boosted sentiment, although the World Health Organization played down the reports.
“It’s good that asset prices from equities to commodities seem to be stabilising for now but I would caution that there’s the risk of soft Chinese economic data that could affect sentiment when it’s released in a couple of weeks’ time,” said Xiao Fu, head of commodity market strategy at Bank of China International in London.
“I don’t think this rally will be sustained. The stimulus can be effective to a certain extent but the operating rates of some manufacturers and ports will face some physical constraints, so that would be reflected in the data later on.”
Three-month copper on the London Metal Exchange hit $5,769 a tonne, its highest since Jan. 27, before paring gains. It closed 1.9% firmer at $5,722 in final open-outcry trading.
LME copper had tumbled 13% during a string of 14 consecutive losing sessions on fears that the virus would curb economic activity and demand for metals, but the slide ended on Monday.
* COPPER OUTPUT/DEMAND: China’s copper smelters will reduce output by more than 15% in February from last month due to the coronavirus outbreak, said Antaike, the research arm of the China Nonferrous Metals Industry Association.
“We expect some short-term headwinds to copper demand from China as a result of the novel coronavirus epidemic,” said analyst Sabrin Chowdhury at Fitch Solutions in Singapore.
* DEATH TOLL: China’s National Health Commission said another 65 people had died, a new daily record taking the toll on the mainland to 490, while there were 24,324 people infected.
* CHINA TRADE: China’s exports and imports likely fell in January after a brief rebound at the end of 2019.
* ZINC SPREAD: The premium of LME cash zinc over the three-month contract fell to $5.25 a tonne, the lowest since late December, from $23.75 two weeks ago, indicating there are more metal supplies in the LME system.
* PRICES: LME aluminium closed 1.8% higher at $1,717 a tonne, nickel climbed 2.6% to $13,160, zinc advanced 2.2% to $2,213, lead dipped 0.3% to $1,820 and tin gained 2.3% to $16,570.
* For the top stories in metals and other news, click or (Additional reporting by Mai Nguyen in Singapore; Editing by David Clarke/Louise Heavens/Ken Ferris)