METALS-Copper steady on growth prospects, U.S. political worries weigh

Mon Sep 30, 2013 12:15pm EDT

Related Topics

* China out on Golden Week holidays from Tuesday

* China official PMI for September due on Tuesday

* U.S. government aims to avert shutdown midnight on Monday (Updates with closing prices)

By Susan Thomas and Harpreet Bhal

LONDON, Sept 30 (Reuters) - Copper steadied on Monday as a soft dollar and signs of steady global growth offset investors' concerns about the prospect of an imminent U.S. government shutdown.

U.S. Republicans and Democrats are locked in an impasse over funding and if a stop-gap spending bill is not passed before midnight on Monday in Washington, government agencies and programmes deemed non-essential will begin closing for the first time in 17 years.

Concerns about the shutdown pushed world shares and the dollar lower.

Benchmark three-month copper on the London Metal Exchange ended at $7,302 a tonne, from $7,300 at the close on Friday.

Prices were set to finish the quarter up more than 8 percent, but they are still down by around 8 percent this year.

"Downside momentum is dominating the global equities market and usually commodities track the momentum in equities and currencies," Sucden senior research analyst Myrto Sokou said.

However, recent U.S. and China's economic data was underpinning the price of copper, which is used in construction and power cable.

"Some of the data was in line with expectations, but it's still quite decent data," Sokou said. "And we have seen a slow but steady recovery in China. So I think the base metals market is slightly more optimistic than the rest of the financial markets."

China's factory sector grew in September after rising foreign orders made up for a subdued home market, a private survey showed, suggesting Asia's economic powerhouse is starting to turn the corner, although a firm rebound remains elusive.

China's markets are closed for a week from Tuesday for Golden Week celebrations but the government will still release its September reading for the manufacturing sector on Tuesday. A string of reports from Europe and the United States this week could help set the tone for trade.

A softer dollar also helped to underpin copper. A weak dollar makes commodities priced in it less expensive for holders of other currencies.

Democrats who control the U.S. Senate were confident that they would defeat Republicans' efforts to delay "Obamacare" health reforms on Monday and send a "clean" bill to keep the federal government operating back to the House of Representatives.

"Most markets will be entering unfamiliar territory over the next few weeks, with the first salvo possibly hitting at midnight tonight when the U.S. government shuts down its nonessential operations, the first time this has happened since 1995," Ed Meir, analyst at INTL FCStone wrote in a note.

In other metals, aluminium closed at $1,845 from $1,839, zinc ended at $1,918 from $1,907, lead closed at $2,117 from $2,100, tin ended unchanged at $23,350 and nickel closed at $13,955 from $13,985.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin (Additional reporting by Melanie Burton in Singapore; editing by James Jukwey)

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