* Euro rebounds vs dollar after U.S. housing report
* Premium of cash copper to 3-month contract at $103
By Harpreet Bhal and Chris Kelly
LONDON/NEW YORK, April 26 (Reuters) – Copper prices rose on
Thursday to their highest levels in more than two weeks, climbing with
global equities on the back of the U.S. Federal Reserve’s commitment
to support growth.
Copper extended gains from the previous session during which the
U.S. Federal Reserve forecast U.S. growth to “remain moderate over
coming quarters and then pick up gradually,” and said it was ready to
launch another round of bond buying if the U.S. economy weakens.
Disappointing U.S. jobless claims data seemed to muddy the Fed’s
bullish growth outlook, but traders said the central bank’s more
accommodative tone will likely help to keep a floor under prices of
copper and other risk assets.
“The data has been a little bit softer lately, but Bernanke’s
comments yesterday were a little bit comforting to the markets,” said
Matthew Zeman, head of trading with Kingsview Financial in Chicago.
London Metal Exchange (LME) benchmark copper pushed above
its 200-day moving average to touch a session peak at $8,335 a tonne,
its priciest level since April 10.
The metal, used in power and construction closed at $8,322 from a
last bid of $8,205 on Wednesday.
Data showed the number of Americans lining up for jobless benefits
fell only slightly last week and a trend measure rose, the latest sign
of a weaker pace of healing in the still-struggling labor market.
Still, the prospect of additional quantitative easing has raised
the outlook for inflation and should help increase asset prices. But
economists at most major Wall Street firms say there is less than a 30
percent chance the Fed will undertake another massive round of
monetary stimulus, a Reuters poll showed.
“We see some confidence about the economy coming back to the
market, and that is supporting the euro and supporting the base
metals, which have been retreating recently,” Eugen Weinberg, an
analyst at Commerzbank, said.
The euro rallied against the dollar in a volatile session on
Thursday, which saw the single currency swing from a three-week high
to losses and back higher again after a U.S. housing report offered
hopes of a pickup in housing and raising risk appetite.
HIGH CANCELLATION
In the physical copper market, the premium in cash copper to
three-month copper prices rose to $103, nearing the $114 level hit
last week, its highest since August 2008.
The tightness in the spot market was also reflected in an
eight-year high in the ratio of cancelled warrants to total LME stocks
at 42.32 percent, while the total stockpile is near its
lowest level since late 2008.
“Cancelled warrants are at multiyear highs, and this is pointing
to more outflows in the coming weeks and months and that is again
helping the copper market,” Weinberg said.
Some traders and analysts say the situation was caused by an
artificial supply squeeze as some large trading houses held dominant
positions on the LME.
The Shanghai copper curve flipped back into a small contango from
backwardation in the previous session. A backwardation generally
suggests reduced supply availability or increased near-term demand.
“The views on price moves are very contradictory, and that’s why
you see rather high open interest in Shanghai. People who look at
fundamentals believe that prices should head south, while those who
think the short squeeze will continue expect prices to rise,” said a
Shanghai-based trader.
Aluminium closed at $2,086 in from Wednesday’s close of
$2,075 and zinc at $2,035 from $2,005.50.
Lead finished at $2,124 from $2,091, tin at
$22,310 from $21,925, and nickel at $18,200 from $17,605.
Metal Prices at 1622 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2011 Ytd Pct
move
COMEX Cu 376.40 6.40 +1.73 344.75 9.18
LME Alum 2088.00 13.00 +0.63 2020.00 3.37
LME Cu 8317.00 112.00 +1.37 7600.00 9.43
LME Lead 2117.00 26.00 +1.24 2034.00 4.08
LME Nickel 18208.00 603.00 +3.43 18650.00 -2.37
LME Tin 22350.00 425.00 +1.94 19200.00 16.41
LME Zinc 2033.50 28.00 +1.40 1845.00 10.22
SHFE Alu 16180.00 35.00 +0.22 15845.00 2.11
SHFE Cu* 58290.00 700.00 +1.22 55360.00 5.29
SHFE Zin 15595.00 95.00 +0.61 14795.00 5.41
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
