October 27, 2011 / 10:50 AM / in 9 years

METALS-Copper up 4 pct on EU debt deal, China growth hopes

* Copper LME inventories down 8 percent this month
    * Peru union rejects Freeport's arbitration plea
    * Coming up: U.S. GDP, job data; 1230 GMT

    By Silvia Antonioli	
    LONDON, Oct 27 (Reuters) - Copper rose 4 percent on Thursday
to hit its highest in more than a month as investors welcomed a
long-awaited deal agreed by European leaders to contain the debt
crisis and on hopes that China will loosen its monetary policy
and boost growth.	
    Strikes at  Freeport McMoRan Copper & Gold Inc 
mines in Peru and Indonesia were also fuelling concerns about
supply tightness and supporting copper prices.	
     Benchmark copper on the London Metal Exchange rose
to $7,955 a tonne by 1018 GMT, after rising 2 percent in the
previous session, when it closed at $7,680 per tonne.	
    The metal, used in power and construction hit a session high
of $7,958.75 per tonne, its highest since Sep. 22.	
    Euro zone leaders struck a deal with private banks and
insurers on Thursday for them to accept a 50 percent loss on
their Greek government bonds under a plan to lower Greece's debt
burden and try to contain the two-year-old euro zone crisis.
 	
    "The European resolutions have been the most important
influence, China is second in importance and the fundamentals
are always important in a sense but currently taking a back
seat," said Standard Chartered analyst Daniel Smith talking
about the factors driving copper prices.	
    "We've seen an upturn in risk appetite across the board; the
equity markets have moved higher, the dollar's weakened and
that's tended to take a lot of commodities higher. The debt
crisis and force majeure at Freeport have added to the bullish
story."	
    Freeport declared force majeure on some concentrate sales
from its strike-hit Grasberg mine in Indonesia on Wednesday.
 	
    The union at the Peruvian copper mine Cerro Verde said late
on Wednesday it rejected a request it received from the mine's
owner, Freeport-McMoRan , to go into labour arbitration
that would end a month-old strike. 	
    	
    	
	
    CHINESE GROWTH	
    "We would argue that copper stands out within the sector
from a fundamental perspective, as the physical market is in
short supply, a situation that is unlikely to reverse any time
soon," Credit Suisse said in a research note.	
     "The key issue is that some of the largest copper mines are
plagued by falling ore grades and labor disputes. At the same
time, Chinese demand has remained resilient and imports have
picked up considerably in recent months, driven by favourable
price differentials between Shanghai and London."	
    Hopes that top metals consumer China will loose its monetary
policy, and boost economic growth and metals demand also helped
industrial metals.	
    Many market watchers expect the People's Bank of China
(PBOC) will begin to loosen its tight liquidity policy by
year-end as China's economic growth slows, while hopes run high
that inflation has peaked. 	
    China is the world's largest importer of copper and consumes
about 40 percent of the metal global supply.	
    Confirming improving demand for copper, inventories at
warehouses monitored by the LME fell for the fifth consecutive
day, by 2,750 tonnes to 434,675 tonnes, latest data showed. 
     Copper stocks have fallen by about 8 percent since the
beginnig of the month.	
    "It's worth noting that we've seen pretty steady draw downs
in LME stocks for most the base metals in recent days so I think
it's quite a good story for base metals at the moment,
particularly for copper," Smith said.	
    In other metals, aluminium was at $2,255.50 from $2,215 per
tonne at the close on Wednesday.	
    "We believe aluminium prices, along with the rest of the
complex, should find support on the back of renewed demand for
riskier assets stemming from encouraging developments on the
Greek debt crisis," said Metal Bulletin Research analyst Kamil
Wlazly.	
    "The upside, however, is likely to be capped by softening
demand in China, high global inventories and lack of constraints
on supply."	
    Tin was at $22,000  from $21,375 while zinc
 , used to galvanize steel was at $1,905.75 from
$1,855 Wednes day's close.	
    Battery material lead was at $1,980 from $1,924 
 and nickel was at $19,825 from $19,125.	
    	
    	
 Metal Prices at 1017 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2010   Ytd Pct
                                                              move
  COMEX Cu       351.20        2.40     +0.69     444.70    -21.03
  LME Alum      2253.25       38.25     +1.73    2470.00     -8.78
  LME Cu        7952.00      272.00     +3.54    9600.00    -17.17
  LME Lead      1977.50       53.50     +2.78    2550.00    -22.45
  LME Nickel   19801.00      676.00     +3.53   24750.00    -20.00
  LME Tin      21950.00      575.00     +2.69   26900.00    -18.40
  LME Zinc      1902.75       47.75     +2.57    2454.00    -22.46
  SHFE Alu     16440.00       60.00     +0.37   16840.00     -2.38
  SHFE Cu*     58040.00      810.00     +1.42   71850.00    -19.22
  SHFE Zin     15145.00      200.00     +1.34   19475.00    -22.23
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
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