October 26, 2012 / 2:16 AM / in 5 years

Copper rises from seven-week low on U.S. growth optimism

LONDON (Reuters) - Copper rose from a 7-week low on Friday, after data showed U.S. economic growth picked up in the third quarter, quashing pessimism on the state of the global economy and boosting demand prospects for industrial metals.

Benchmark copper on the London Metal Exchange (LME) was at $7,835 by GMT, up 0.3 percent from Thursday’s close of $7,815 a metrc tonne and up from a 7-week low of $7,756.25 earlier in the session.

Aluminum, lead, zinc and nickel also rose from a 1-1/2 month low hit previously while tin hovered around its lowest level since early September.

U.S. economic growth picked up in the third quarter as a late burst in consumer spending offset the first cutbacks in investment in more than a year by cautious businesses.

“It was a positive surprise so all the commodities turned higher, especially the industrial commodities,” said Commerzbank analyst Eugen Weinberg.

“One of the reasons for the copper slide before was the economic pessimism. So if the situation is not quite as bad as many expected, then that’s a definitely positive for metals.”

Copper, however, was still down 2 percent for the week and on course for its biggest weekly fall since late June.

Prices for the metal rallied nearly 8 percent in September, fuelled by the third round of quantitative easing (QE) by the U.S. Federal Reserve, the promise of bond buying by the European Central Bank (ECB) and stimulus measures in Japan and China.

Copper then weakened in October as expectations that real demand for metals would improve failed to materialize.

Capping gains, the euro fell against the dollar, with traders citing concerns that Greece may miss its austerity targets and political uncertainty in Athens. <FRX/>

A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies.


In top copper consumer China, factory output recovery remains clouded by uncertainty in export markets, although it should grow faster in the last three months of 2012 than in the third quarter, the Ministry of Industry and Information Technology said on Thursday.

“Downstream copper buyers in China are taking a wait-and-see attitude to restocking, as they are undecided about copper’s outlook over the next few months,” said a Shanghai-based physical trader.

Chinese buying interest has been weak, although three-month LME copper prices had dipped below the most active Shanghai copper contract for the most part of the week, the trader added.

In other metals, Aluminum was at $1,939 from a close of $1,938 on Thursday.

Analysts warned producers of the packaging material may face higher seaborne alumina costs should China’s bauxite imports from one of its top suppliers, Indonesia, continue to drop. Bauxite is used to make alumina, the precursor of Aluminum.

“The decline in Indonesian bauxite exports in September may suggest bauxite operators are not obtaining export licenses because they are turning away from investing in alumina refineries in Indonesia,” Australia’s Commonwealth Bank warned in a research note on Friday.

Lead was at $2,018 from a $2,005 close on Thursday and zinc at $1,843.75 from $1,836.

Nickel changed hands at $16,232 versus Thursday’s close of $16,125 while tin traded at $20,050 from Thursday’s close of $20,400, having earlier hit its lowest level since early September at $19,850.

Additional reporting by Carrie Ho in Shanghai; editing by Jason Neely

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