Copper Rises for Second Day on Speculation About Stimulus Steps
Copper rose for a second day in New York amid speculation China and the U.S., the world’s two largest users of the metal, may move to stoke their economies.
The Federal Reserve is ready to take steps to spur growth “as appropriate,” Chairman Ben S. Bernanke said yesterday in a second day of testimony before lawmakers. China’s swaps market indicated Premier Wen Jiabao will probably decide to lower banks’ reserve requirements and encourage corporate lending.
“There remain expectations of wider QE in the markets,” David Wilson, director of metals research at Citigroup Inc. in London, said by phone today, referring to so-called quantitative easing. “This is quite surprising, given Bernanke was less than forthcoming over this possibility in his testimony over the past two days.”
Copper for September delivery climbed 1.6 percent to $3.53 a pound by 8:45 a.m. on the Comex in New York. The London Metal Exchange’s three-month contract rose 2 percent to $7,787.75 a metric ton.
Prices advanced on “short-covering,” Andrew Silver, a trader at Natixis Commodity Markets Ltd. in London, said by e- mail today, referring to purchases made to close out bets on falling prices.
The increased appetite for risk may have been encouraged by stronger equity markets and improved U.S. housing figures may be helping sentiment, Australia & New Zealand Banking Group Ltd. (ANZ) said in a report. The Copper Development Association says construction generates about 40 percent of demand for the metal, used in pipes and wiring.
U.S. housing starts neared a four-year high in June and exceeded the median estimate in a Bloomberg News survey of economists, government figures showed yesterday. European shares gained today and U.S. equity benchmarks rose at the start of trading in New York.
“It looks as though the markets shook off the lack of further talk about QE well,” William Adams, an analyst at Basemetals.com in London, said by e-mail yesterday. “With the market ever hopeful that China will boost infrastructure spending, it may be there is room for some light optimism.”
Aluminum, zinc, tin, nickel and lead rose in London.
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