What's Up: London copper rallied the most in a week yesterday, with traders expecting fresh shoots of economic revival to be revealed in China this week.
Copper rises on signs of recovery in China
London copper rallied the most in a week yesterday, with traders expecting fresh shoots of economic revival to be revealed in China this week.
Hopes that United States policymakers would avert a looming fiscal crisis also stoked appetite for risk.
"The trough seems to be behind us on China. If you take historical information like fixed asset investment … it seems we are on a higher footing," said Dominic Schnider, the head of commodity research at UBS Wealth Management.
"[But] the US industrial production figures on Friday painted a disappointing picture, Europe's numbers have been on the weak side. Purely on macro numbers, why would you want to be more bullish? We reduced our allocation to copper last week although we still have a small preference."
Three-month copper on the London Metal Exchange gained 0.91 per cent to US$7,674.25 a tonne in the British capital yesterday, reversing small losses from the previous session, when it also posted its first weekly gain since October 7.
The most-traded February copper contract on the Shanghai Futures Exchange climbed 0.56 per cent to close at 56,050 yuan a tonne yesterday.
US industrial output unexpectedly fell last month as hurricane Sandy disrupted production.
Hedge funds and money managers turned bearish on copper futures and switched the market into a net short on economic worries, while they raised their net long positions in gold and silver.
The direction of the Shanghai Composite Index could flag near term direction on copper, RBC Capital said in a note.
The red metal has been stuck in a $7,500 to $7,800 range this month.
China stock indexes closed mixed yesterday, following a late rally after the Shanghai Composite Index touched its lowest intra-day level in more than three years.