Chile earthquake sends copper up as oil near $94

SINGAPORE (Reuters) - Oil prices hovered near $94 on Thursday bolstered by U.S. supply concerns ahead of winter, supporting energy related stocks, a day after Asian share markets posted their best one-day gain in nearly two months.

In this file photo an Iraqi worker walks at Sheaiba oil refinery in Basra, 550 km (340 miles) south of Baghdad, March 29, 2007. Oil prices hovered near $94 on Thursday bolstered by U.S. supply concerns ahead of winter, supporting energy related stocks, a day after Asian share markets posted their best one-day gain in nearly two months. REUTERS/Atef Hassan

Investors betting on falling U.S. crude inventories pushed oil up more than 3 percent to about $94 a barrel the day before, and that in turn helped drive gold above $810 an ounce from around $800.

NYMEX December crude was down 12 cents at $93.97 a barrel by 3 a.m. British Time.

Copper prices in Asian markets rose more than 1 percent after an earthquake in Chile, the world’s top copper producer, while tin eased from its contract high reached on Wednesday.

A powerful earthquake hit mineral-rich Chile, which provides more than a third of annual supplies of the red metal, on Wednesday, killing at least two people and halting output at some of the world’s largest copper mines.

“Any disruption like this, especially when we’re not sure when production will come back up, will definitely have a major impact, especially also because Chile is responsible for such a large part of total copper output,” said Robbert Van Batenburg, research head at Louis Capital Markets in New York.

Copper for delivery in three months MCU3 on the London Metal Exchange rose $85 to $7,220 a tonne by 2:41 a.m. British Time, while Shanghai's January copper contract was up 1.36 percent, or 810 yuan, at 60,580 yuan a tonne.

Asian share markets took a breather on Thursday as investors turned slightly cautious ahead of key U.S. consumer inflation data due later in the day.

Those worries kept a lid on the dollar, which recovered from overnight losses against a basket of major currencies .DXY but was struggling to make further headway.


By the midsession break, Tokyo's Nikkei average .N225 had inched up 0.3 percent following Wednesday's 2.5 percent bounce. MSCI's measure of other Asia Pacific stocks .MIAPJ0000PUS slipped 0.3 percent, pausing after a 3.3 percent jump in the previous session.

That rise for the MSCI index on Wednesday was the biggest one-day gain since the 4.1 percent rally on September 19 and followed a string of losses over the last few sessions when credit worries weighed on sentiment.

Share markets in South Korea .KS11, Australia .AXJO, Taiwan .TWII, Hong Kong .HSI and Singapore .STI were all moderately weaker, in line with falls on Wall Street.

“Investors still appear cautious about pushing the market higher, bracing for more fallout from the U.S. subprime troubles,” added Kim Young-il, a fund manager at Hanwha Investment Trust Management in Seoul.

Energy firms such as Santos Ltd STO.AX rose 1.8 percent to A$13.50 and Oil Search Ltd OSH.AX gained 3.3 percent to A$4.67 after a sharp rise in oil prices.

Financial stocks also continued to advance, with Japan's three largest banks rising after Mizuho Financial Group Inc 8411.T advanced 2.6 percent despite posting a 17 percent drop in first-half profit on Wednesday.

“Although Mizuho cut its full-year forecast, its core banking operation is not so bad, and that is reassuring,” said Takashi Ushio, head of investment strategy division at Marusan Securities.

Gold miners were also in favour following the rebound in gold prices, with Newcrest Mining NCM.AX gaining nearly 3 percent and Lihir Gold LGL.AX adding 0.5 percent.

In the forex market, the dollar was steady from late U.S. trading at 111.27 yen, but down from Wednesday’s intraday high of 111.76 yen on electronic trading platform EBS.

The yen steadied against higher-yielding currencies as worries about credit market turmoil persisted.

The euro bought $1.4646, off the high of about $1.4725 on Wednesday, and fetched 163.09 yen, also off the previous session’s high of 164.32 yen.

Safe-haven Japanese government bonds also benefited from the uncertain outlook, pushing the yield on the benchmark 10-year bond down 2 basis points to 1.495 percent.

Editing by Louise Heavens