December 20, 2011 / 10:28 AM / 8 years ago

METALS-Copper rises on upbeat German data, weak dollar

* German Ifo business index rises in December
    * Euro extends gains vs dollar after US housing data
    * Copper on track for first annual fall since 2008

    By Harpreet Bhal	
    LONDON, Dec 20 (Reuters) - Copper rose on Tuesday near a one week high
as a weaker dollar and better-than-expected German business sentiment
temporarily overshadowed longstanding worries that policymakers' efforts to
address the euro zone debt crisis are inadequate	
    Also boosting confidence was data showing U.S. housing starts and permits
for future construction jumped to a 1-1/2 year high in November, reducing fears
of a global economic slowdown and further rekindling risk appetite.
  	
    Three-month copper on the London Metal Exchange (LME) rose to $7,470
a tonne, its best level since Nov. 14, and closed at $7,410 a tonne from $7,260
on Monday, although trading volumes have been tapering off ahead of the year-end
holiday season.	
    "It's entirely to do with confidence. Anything that looks slightly positive
generally causes a short covering rally," said Citi analyst David Wilson.	
    "The euro (zone) debt crisis hasn't gone away, it's difficult to be positive
short term if you think China is not going to be doing much in January because
of the new year, and I don't think markets think that European politicians have
much credibility."	
    German business morale rose sharply in December, defying expectations for a
decline and underscoring the strength of the economy in the face of a sovereign
debt crisis that has hammered growth in other euro zone members. 	
    A rebound in the euro against the dollar helped boost copper's gains. A weak
dollar makes commodities priced in the U.S. unit cheaper for holders of other
currencies. 	
    Copper prices have shed nearly one quarter of their value since the start of
the year, on track for its first annual decline since 2008, as a deepening euro
zone debt crisis has pushed investors to liquidate assets such as industrial
metals.	
    Analysts warned sentiment could remain fragile towards the end of the year
in the face of persistent caution about the euro zone crisis as investors grow
weary about politicians' inability to contain the region's debt troubles. 	
    Euro zone ministers agreed on Monday to boost IMF resources by 150 billion
euros to ward off the debt crisis and won support for more money from EU allies,
but it was unclear if the bloc would reach its 200 billion euro target after
Britain bowed out. 	
    On Tuesday however, sentiment improved after short-term financing costs for
Spain more than halved as banks lapped up its debt, with much of the purchasing
power said to come from cut-rate money to be lent by the European Central Bank.
 	
    "We would expect prices to be buffeted about by the news flow but in the
absence of any major development we would look for further consolidation, with a
downside bias as the technical indicators generally seem to be pointing lower,"
FastMarkets said in a note. 	
  	
     	
    ALUMINIUM STOCKS RISE 	
    Aluminium stocks in LME-registered warehouses rose by 49,775 to
a new record 4,922,800 tonnes, data showed. Some 28,875 tonnes flowed into
warehouses in Detroit.	
    Aluminium ended at $2,002 a tonne from $1,962 a tonne on Monday. 	
    Zinc, used in galvanising, was last bid at $1,865 from $1,838. Tin
 was last bid at $18,975 from $18,695.	
    Tin prices are down more than 30 percent so far this year, the biggest
year-to-date percentage decline in the base metals complex. 	
    "Although the self-imposed export ban by Indonesian tin producers has not
yet been officially lifted, it has de facto collapsed once and for all,"
Commerzbank analysts said in a note. 	
    "There is now a risk of more smelters bringing tin to the market which they
had previously withheld, thereby further pressurizing the price." 	
    Battery material lead closed at $1,959 from $1,937, while
stainless-steel ingredient nickel ended at $18,865 from $18,380, having
earlier hit $18,999, its best level since early November.  	
    The $1.5 billion Ramu nickel project, China's single-largest mining
investment in Papua New Guinea, should be operating close to maximum capacity by
mid to late-2013, Australian minority partner Highlands Pacific said on
Tuesday. 	
 Metal Prices at 1712 GMT
                                                                  
  Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                              move
 
  LME Alum      2003.00       41.00     +2.09    2230.00    -10.18
  LME Cu        7409.50      149.50     +2.06    7375.00      0.47
  LME Lead      1959.00       22.00     +1.14    2432.00    -19.45
  LME Nickel   18865.00      485.00     +2.64   18525.00      1.84
  LME Tin      18975.00      280.00     +1.50   16950.00     11.95
  LME Zinc      1865.00       27.00     +1.47    2560.00    -27.15
  SHFE Alu     15750.00       25.00     +0.16   17160.00     -8.22
  SHFE Cu*     53740.00      160.00     +0.30   59900.00    -10.28
  SHFE Zin     14780.00       -5.00     -0.03   21195.00    -30.27
 ** 1st contract 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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