* Correlation with U.S. equities strengthens
* China bank lending spikes in March
* Coming up: China Q1 GDP data Friday
By Chris Kelly and Silvia Antonioli
NEW YORK/LONDON, April 12 Copper jumped over 2 percent on
Thursday, swept up in a broader-based rally in the base metals and other risk
asset markets, as investors' concerns about Europe's debt crisis eased and
Chinese growth prospects turned more positive.
Copper volumes remained heavy on Thursday as buyers took advantage of the
swift sell-off earlier in the week to reposition and boost prices of the red
metal back above the 100-day moving average.
Another strong rally in global equities and a firmer tone in the euro versus
the dollar supported the rally in base metals, which pushed higher after a
narrower U.S. trade gap spurred by record-high exports suggested better economic
conditions for the second quarter.
"I think we are near the bottom end of where we are going here in the short
term, range-wise," said Matthew Zeman, head of trading with Kingsview Financial
"We are seeing a nice bounce in things. After five days of pretty good
selling, we are seeing a nice bounce in the S&P's today, bonds are down and the
dollar is weaker ... all copper-positive."
London Metal Exchange (LME) benchmark copper ended up $180 or 2.2
percent at $8,220 a tonne, recovering from a near three-month low at $8,018 on
In New York, the May COMEX contract climbed 8.10 cents to settle at
$3.7205 per lb, near the upper end of its $3.6340 to $3.7310 session range.
COMEX copper volumes reached above 92,500 lots in late New York trade, more
than 50 percent above the 30-day norm, according to preliminary Thomson Reuters
Copper found outside support from a modest drop in benchmark bond yields in
Italy and Spain following an Italian auction of three-year notes, and a firmer
euro versus the U.S. dollar, which signaled an easing of near-term concern about
the euro zone's debt troubles.
"It (Europe's debt crisis) has been a contributory factor in the weakness
over the last couple of weeks, but the default position of markets is to be
bullish unless the evidence is overwhelmingly the other way around," said BNP
Paribas analyst Stephen Briggs.
One bullish factor behind the rally Thursday was data showing China's bank
lending trumped forecasts to rise to 1.01 trillion yuan ($160.1 billion) in
March -- a sign of fresh traction in Beijing's efforts to ease monetary policy
and boost credit creation to support the cooling economy.
Furthermore, stronger March car sales in China added to the upbeat tone.
Next on tap for the base metals is first-quarter growth data from China,
which is expected to show its weakest quarter of annual growth in nearly three
years on Friday, with investors fretting the economy could cool even further in
coming months and further dampen global growth.
Economists polled by Reuters forecast Q1 GDP growth at 8.3 percent from a
Adrian Day, president at Adrian Day Asset Management, which has $165 million
in assets, said that even at 8.3 percent, China's demand for copper will
continue to grow.
"With inflation sort of under control ... well under 4 percent and if growth
comes in at 8.3 percent, that's pretty astonishing," he said.
"If their economy continues to grow at that rate or anywhere near that rate,
demand for copper next year, the year after and for the next 10 years is going
to be astonishing."
The World Bank has lowered its forecast for China's 2012 economic growth to
8.2 percent from 8.4 percent, reinforcing the view that China is set for its
slowest annual growth in a decade.
Slower growth in China however, would not necessarily be negative, analysts
say, as it makes monetary easing more likely.
Nonetheless, weaker copper demand and raising inventories in China remain
one of the main concerns for investors.
Inventories of copper in warehouses monitored by the Shanghai futures
Exchange have quadrupled since the beginning of the year, which might suggest
Tin ended up $235 at $22,655 a tonne and nickel surged over
3 percent at $18,800 a tonne from a last bid of $18,100 on Wednesday.
Indonesia, the world's top exporter of thermal coal and refined tin and a
large nickel producer, should quickly impose a tax on mining exports, the
industry minister said on Thursday in comments likely to worry
Metal Prices at 1820 GMT
Metal Last Change Pct Move End 2011 Ytd Pct
COMEX Cu 371.40 7.45 +2.05 343.60 8.09
LME Alum 2104.00 5.00 +0.24 2020.00 4.16
LME Cu 8220.00 180.00 +2.24 7600.00 8.16
LME Lead 2098.00 45.00 +2.19 2035.00 3.10
LME Nickel 18700.00 525.00 +2.89 18710.00 -0.05
LME Tin 22655.00 230.00 +1.03 19200.00 17.99
LME Zinc 2039.00 44.00 +2.21 1845.00 10.51
SHFE Alu 16105.00 65.00 +0.41 15845.00 1.64
SHFE Cu* 58230.00 350.00 +0.60 55360.00 5.18
SHFE Zin 15465.00 155.00 +1.01 14795.00 4.53
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07