October 28, 2011 / 10:55 AM / 9 years ago

METALS-Copper slips but outlook bright post EU debt deal

* EU debt deal seen as imperfect but OK, mkt awaits details
    * Copper heads for biggest one-week increase since January 2009
    * Coming up: U.S. consumer sentiment for October, 1355 GMT

    By Maytaal Angel	
    LONDON, Oct 28 (Reuters) - Copper slipped on Friday after a sharp rise in
the previous session, but optimism on Europe's initiatives to tackle the euro
debt crisis and on the U.S. economy kept the red metal firmly on track for its
biggest weekly gain in nearly three years.	
    Three-month copper on the London Metal Exchange (LME) traded at
$8,000 in official midday rings versus $8,145 a tonne at the close on Thursday.
Earlier the metal used in power and construction rose to as high as $8,280 a
tonne. 	
    "We're constructive towards metals. We still think the fundamental story is
very strong, and we are not surprised or concerned that there is some
consolidation," said Nikos Kavalis, commodity strategist at RBS Global Banking &
Markets.	
    On the EU debt deal, he said: "Regardless of whether there's questions, what
it has done is given the market breathing space to focus on commodity-specific
issues."	
    Euro zone leaders struck a deal on Thursday to contain the region's debt
crisis but are now under pressure to finalise the details of their plan to slash
Greece's debt burden and strengthen their rescue fund. 	
    "This reinforces that the European leadership's taking the lead in
addressing the financial problems seriously," said Warren Hogan, chief economist
at the Australia and New Zealand Banking Group in Melbourne. 	
    "The market will now be able to stop fixating on the problems in Europe, the
risks posed by Europe, and look at the underlying fundamentals, which aren't as
bad as market prices suggested in recent times." 	
     LME copper prices have gained about 13 percent this week, the largest
increase since January 2009. Copper lost about a quarter of its value in the
three months to end-September, making it one of the worst performers among
commodities during the period.  	
    Investors are betting on a recovery in demand for industrial metals and
energy after the U.S. economy expanded at its fastest pace in a year in the
third quarter. Gross domestic product in the world's largest economy grew at a
2.5 percent annual rate, up from 1.3 percent in the prior three months.
 	
    "The U.S. data which was soft in August and September has been strong the
entire month of October. The market, which was trading the possibility of a U.S.
recession, is having to price that out entirely," said an analyst at a category
one LME firm.	
    On China, which accounts for about 40 percent of the world's copper demand,
he noted: "Chinese data is still reasonably solid. I struggle to see where the
softening Chinese economy is. It's not in the data." 	
    	
    SUPPLY ISSUES	
    Copper prices were also underpinned by this week's declaration of force
majeure on some concentrate sales from Freeport's strike-hit Grasberg mine in
Indonesia -- the world's second-largest copper mine. 	
    Confirming improving demand for copper, inventories at warehouses monitored
by the LME fell for a sixth consecutive day, by 2,300 tonnes to 432,375 tonnes,
data showed. 
    Copper stocks have fallen by about 8 percent this month. Material for
next-day delivery has been getting harder to come by and is trading at a
discount of only $2.50 to the three-month benchmark contract - its narrowest
since March. 	
    In the broader markets, global stocks, seen as a proxy for economic growth,
headed for their best week in over two years on Friday, but the euro eased from
the seven-week peak it struck after the debt deal. A poorly subscribed Italian
bond auction showed some investors have yet to be convinced the region's
problems are on the way to being solved.  	
    Looking ahead, Federal Reserve policymakers will meet next week to discuss
ways to help boost the U.S. economy and lower the unemployment rate, a move that
may propel markets further. 	
    In the meantime, markets are awaiting U.S. consumer sentiment data for
October, to be released later this session. 	
    Denting sentiment a touch, U.S. data showed civilian employment costs rose
much less than expected during the third quarter as wages and salaries posted
their weakest growth in a year, while benefits expanded at their slowest pace
since 1999. 	
?   Among other metals, zinc , used in galvanizing traded at $1,925 in
rings a tonne from $1,945 at Thursday's close, while soldering metal tin 
traded at $21,975 from $22,050.	
    Helping underpin tin was news that smelters in top exporter Indonesia are
likely to continue a stoppage of ingot supplies into November, as they try to
push benchmark prices above $25,000 a tonne. 	
    Elsewhere, lead traded at $2,010 from $2,039, aluminium at
$2,241 from $2,255 and nickel was last bid at $19,700 from $19,900.	
 	
 Metal Prices at 1245 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                              move
  COMEX Cu       365.05       -4.15     -1.12     334.65      9.08
  LME Alum      2241.00      -14.00     -0.62    2230.00      0.49
  LME Cu        8000.00      320.00     +4.17    7375.00      8.47
  LME Lead      2009.00      -30.00     -1.47    2432.00    -17.39
  LME Nickel   19700.00     -200.00     -1.01   18525.00      6.34
  LME Tin      21945.00     -105.00     -0.48   16950.00     29.47
  LME Zinc      1927.00      -18.00     -0.93    2560.00    -24.73
  SHFE Alu     16490.00       50.00     +0.30   17160.00     -3.90
  SHFE Cu*     59250.00     1210.00     +2.08   59900.00     -1.09
  SHFE Zin     15420.00      275.00     +1.82   21195.00    -27.25
 ** 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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