Copper Climbs as Chinese Manufacturing Adds to Growth Signals

Copper rose in London, closing in on an annual climb, after the strongest gain in 19 months in Chinese manufacturing added to signs of improving growth in the world’s largest consumer of the metal.

A Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics showed a final reading of 51.5 in December, the highest since May 2011. Chinese industrial production and retail sales topped estimates in November and industrial companies’ profits had a third monthly increase, reports showed this month.

“Manufacturing in China is running strongly,” Steve Hardcastle, head of client services for industrial commodities at Sucden Financial Ltd. in London, said by phone.

Copper for delivery in three months added 0.7 percent to $7,941 a metric ton by 10:10 a.m. on the London Metal Exchange. Prices are up 4.5 percent this year and down 3.2 percent for the fourth quarter. Copper for delivery in March rose 0.7 percent to $3.614 a pound on the Comex in New York.

The LME will be closed tomorrow for New Year’s Day and Comex floor trading will be shut. Net-long positions, or wagers on rising prices, held by funds dropped to 14,988 Comex futures and options contracts as of Dec. 25 from 24,531 a week earlier, according to the U.S. Commodity Futures Trading Commission.

Concern about the so-called fiscal cliff in the U.S. “is causing some nervousness,” Hardcastle said. Lawmakers in the nation, the second-largest copper user, will continue talks today as they near a midnight deadline to avert higher taxes and cuts in government spending. A failure to reach an agreement risks a recession, the Congressional Budget Office has said.

Copper stockpiles tracked by the LME swelled for a 16th session to 320,050 tons, the highest since Feb. 6, daily figures showed. They fell 14 percent this year, the third drop in a row. Zinc stocks jumped 49 percent, the sixth annual increase, and nickel inventories rose 55 percent, the first gain since 2009.

Aluminum, nickel, tin, lead and zinc climbed in London. Tin is up 22 percent this year, leading gains among the LME’s six main metals, and nickel is down 7.9 percent, the only decline.

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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