METALS-Copper leaps 6 pct on stimulus push, jobs data

Fri May 3, 2013 12:25pm EDT

* U.S. jobs growth stronger than expected
    * ECB in line with Fed, BOJ stimulus policy
    * Chinese physical copper demand expected to increase in Q2

    By Silvia Antonioli
    LONDON, May 3 (Reuters) - Copper rose more than 6 percent on
Friday, its strongest daily gain in 18 months, as economic
stimulus moves by central banks raised investor confidence over
growth of industrial metals demand.
    Better-than-expected jobs growth in the United States gave
copper an extra push, and propelled other markets, including
Brent crude and U.S. and European equities, higher. 
    Benchmark copper on the London Metal Exchange closed
at $7,265 per tonne from a close of $6,848 on Thursday. It rose
more than 6 percent, its biggest daily rise since late October
2011, to hit an intraday high of $7,289 per tonne.
    "Base metals are seeing a wave of short covering here on the
back of non-farm payrolls - copper is leading the way," a metals
trader said.
    The LME will be closed on Monday for a UK bank holiday.
    U.S. employment rose more than expected in April, pushing
the unemployment rate to a four-year low of 7.5 percent, which
could help ease concerns of a sharp slowdown in the economy.
 
    "It was surprisingly positive. This shows the job market and
the economy in general appear to be more resilient than
investors had feared," said Joe Manimbo, an analyst at Western
Union Business Solution in Washington.
    The positive sentiment was established earlier this week. On
 Thursday the European Central Bank (ECB) cut interest rates for
the first time in 10 months, a day after the U.S. Federal
Reserve committed to continuing its $85 billion monthly
bond-buying programme to bolster growth. 
    In a bid to spur lending, the ECB said it was also
"technically ready" to cut its deposit rate from the current
zero percent into negative territory, meaning it would start
charging banks for holding their money overnight.
    "The market is finally pricing in the fact that the ECB is
aligning itself with the Fed and the Bank of Japan, pushing away
deflationary worries," said T-Commodity consultancy Gianclaudio
Torlizzi.
    "The ECB action is very important and if you tie this with
the fact that commodities have been oversold lately it creates
the conditions for a strong rebound. We expect copper to move
towards $8,000 by the end of June."
    But some are wary of whether the price gains will be
sustainable.
    "It's encouraging that central banks are willing and able to
provide the liquidity needed to get out of the slump but by and
large people are still worried about the message behind them,
that growth is not satisfactory," said Sijin Cheng, commodities
analyst at Barclays.
    
    RALLY WITH LEGS?
    Also supporting copper was an outflow of the metal from
LME-registered warehouses in the last two weeks
after a six-month rise, which could signal an improvement in
demand from consumers of the metal.
    "Although one swallow does not make a summer ... we
nonetheless believe that the inventory trend reversal could also
support a shift in sentiment among market players, who are
currently assuming a massive copper production surplus of over
400,000 tonnes," Commerzbank said in a reasearch note.
    Barclays' Cheng said she still expects physical demand in
China, the world's biggest consumer of copper and other base
metals, to improve during the second quarter, which should
provide further support to prices.
    In other metals, zinc closed at $1,885 from $1,819
on Thursday, lead at $2,038 from $1,941 and nickel
 at $15,200 from $14,675.
    Aluminium, untraded at the close, was bid at $1,882
from a last bid of $1,811 on Thursday, and tin, also
untraded, was bid at $20,450 from $19,675.
    
 Metal Prices at 1609 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2012   Ytd Pct
                                                              move
  COMEX Cu       329.00       18.80     +6.06     365.25     -9.92
  LME Alum      1881.25      -17.75     -0.93    2073.00     -9.25
  LME Cu        7257.50      409.50     +5.98    7931.00     -8.49
  LME Lead      2036.25       95.25     +4.91    2330.00    -12.61
  LME Nickel   15167.00      492.00     +3.35   17060.00    -11.10
  LME Tin      20150.00      475.00     +2.41   23400.00    -13.89
  LME Zinc      1887.25       68.25     +3.75    2080.00     -9.27
  SHFE Alu     14535.00       75.00     +0.52   15435.00     -5.83
  SHFE Cu*     51340.00     1500.00     +3.01   57690.00    -11.01
  SHFE Zin     14430.00       85.00     +0.59   15625.00     -7.65
 ** 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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