METALS-Copper steady, China data offsets euro zone gloom

Fri Dec 14, 2012 12:28pm EST

* China HSBC Dec flash manufacturing PMI firms to 50.9
    * Euro zone job rate falls, inflation pressures ease
    * U.S. November industrial output up more than expected

    By Susan Thomas and Silvia Antonioli
    LONDON, Dec 14 (Reuters) - Copper was steady on Friday, with a brightening
economic outlook for big metal consumer China offsetting concerns about the euro
zone's deteriorating economy and a potential fiscal crisis in the United States.
    Growth in China's manufacturing sector picked up in December, a preliminary
private survey showed, with rises in areas such as new orders and employment
underlining an improving outlook. 
    The HSBC flash purchasing managers' index for December rose to 50.9, a
14-month high and the fifth straight monthly gain. A figure above 50 indicates
that growth is accelerating, while one below 50 shows slowing growth.
    "That's clearly heading in the right direction. On top of it you've got a
big jump in Chinese equity markets. That's significant as well," said Natixis
analyst Nic Brown.
    "China accounts for 40 percent of the metals market. Even if you have a
situation in which Europe and the U.S. are struggling, if you get stronger
growth in China you're going to get stronger growth in Asia."
    Three-month copper on the London Metal Exchange closed at $8,065, a
tonne, slightly down from the previous session's close of $8,074. The metal hit
a two-month high on Wednesday, and is up more than 6 percent this year.
    China shares significantly outperformed Asian peers on Friday, after the
improved manufacturing data, which was adding support to metals, traders said.
    Prospects are growing that China's new leadership will set in motion the
policies Beijing has outlined to boost infrastructure development, which would
increase demand for industrial metals.
    The country last month approved construction of two city subway projects
worth 49 billion yuan ($7.87 billion), adding to a list of railway project
approvals aimed at boosting growth in the world's second biggest economy.
    "To my mind lots of the policies that have been talked about over the last
three to six months will now start to get implemented," Brown said. 
    "We could find a lot of stimulus coming through as we go into 2013. I
certainly expect that the growth outlook in China will get better."
    Boding well for base metals demand, U.S. industrial output rose more than
expected in November, posting its sharpest increase in nearly two years, as
production bounced back from disruption by superstorm Sandy. 
    November U.S. consumer prices in the meantime fell for the first time in six
months, pushing the euro up against the dollar and pointing to muted inflation
pressures that should allow the Federal Reserve to stay on its ultra-easy
monetary policy path. 
    "Some support came from a weaker dollar after weak inflation data for
November and the U.S. industrial data also helped copper," VTB Capital analyst
Andrey Kryuchenkov said.
    A weaker U.S. currency makes dollar-priced commodities such as metals
cheaper for holders of euros.
   
    
    DIMMER
    In the euro zone, however, the growth outlook is a lot dimmer.
    Europeans' reluctance to spend on travel and eating out slowed increases in
the cost of living in the region last month, and the economy's deteriorating
power to generate jobs offered little chance for consumers to help in economic
recovery.  
    Disappointing German manufacturing sector figures overshadowed a small
pick-up in the wider euro zone purchasing manager index - data from polling of
around 5,000 businesses across the 17-nation bloc that is viewed as a reliable
growth indicator. 
    In the United States, the failure of Democrats and Republicans to break the
impasse over the "fiscal cliff" is raising the possibility of Congress going
beyond the year-end deadline to complete work needed to avert steep tax hikes
and budget cuts that experts fear could lead to another recession.
    A top Democrat in the House of Representatives said if the two sides agreed
in principle on a deal but ran out of time to draft and pass the legislation
implementing it, Congress could pass a temporary measure and work out the
details in the following weeks. 
    In other metals, tin closed at $23,150 a tonne from $22,975 at the
close on Thursday, while zinc ended at $2,090 from $2,073.
    Lead finished $2,296 from $2,303 and aluminium, untraded in
rings, was last bid at $2,122 from $2,126. Nickel closed at $17,875 from
$17,700.
    
 Metal Prices at 1710 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       366.50        1.50     +0.41     344.75      6.31
  LME Alum      2122.50       -3.50     -0.16    2020.00      5.07
  LME Cu        8069.75       -4.25     -0.05    7600.00      6.18
  LME Lead      2295.00       -8.00     -0.35    2034.00     12.83
  LME Nickel   17854.00      154.00     +0.87   18650.00     -4.27
  LME Tin      23010.00       40.00     +0.17   19200.00     19.84
  LME Zinc      2086.25       -8.75     -0.42    1845.00     13.08
  SHFE Alu     15315.00       -5.00     -0.03   15845.00     -3.34
  SHFE Cu*     57730.00      160.00     +0.28   55360.00      4.28
  SHFE Zin     15450.00       95.00     +0.62   14795.00      4.43
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07