METALS-Copper hits 4-mth highs after U.S. jobs data

Trade the News

Saturday September 04, 2010 01:07:14 AM GMT

* Falling copper stocks boost prices

* U.S. job mkt not as poor as expected

* Consumers set to start restocking

(Recasts, updates prices, adds details/quotes)

By Michael Taylor and Maytaal Angel

LONDON, Sept 3 (Reuters) - Copper prices hit a four-month high on Friday after jobs data in the United States beat forecasts, reviving hopes for continued economic recovery following a slew of positive numbers this week.

Benchmark copper for three-month delivery on the London Metal Exchange traded at $7,740 a tonne from $7,635 at the close on Thursday and compared with a session high at $7,745, its best level since late August.

U.S. nonfarm payrolls fell 54,000 in August, data showed, while 123,000 fewer jobs were lost in June and July than previously reported. Analysts were expecting August payrolls to decline by about 100,000.

"The data is in line with indications we received earlier this week. That tentative improvement in sentiment is now confirmed. (Also) overall fundamentals for metals look very supportive," said Credit Suisse analyst Tobias Merath.

"Copper has further upside potential despite the economic slowdown. When we came out of recession a lot of consumers postponed purchases and drew down onsite inventories, now they need to get back to the market."

Backing Merath's view on consumer buying, latest LME data showed copper stocks extended falls, slipping 1,800 tonnes to 397,675 tonnes. They are down from 6-1/2 year highs at 555,075 tonnes in mid-February.

Meanwhile in China, copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 4 percent from a week earlier, the exchange said earlier.

"We expect copper prices to remain well supported from a fundamental point of view, while the potential for fresh fund allocations over the coming months are another bullish factor," said Standard Bank in a note.

Copper rallied on Thursday after data showed a surprise rebound in pending sales of previously owned homes in July, as well as a fall in new jobless claims last week in the U.S.

The numbers came after upbeat U.S. and Chinese manufacturing data on Wednesday. The ISM index of U.S. factory activity rose more than forecast in July while China's official PMI also beat expectations.

"It seems a bit more positive out there across markets," said an upbeat LME trader. "Recent data is helping the mood."

Highlighting the precarious nature of the global economic recovery, Japanese companies' spending on plant and equipment fell at a slower annual rate in April-June than the previous quarter.

Among other metals, aluminium, used in transport and packaging, traded at $2,172 versus $2,145. The metal earlier touched $2,175, its highest point since Aug. 13.

Aluminium stocks eased 5,375 tonnes to remain near record levels above 4.4 million tonnes.

A large portion of those aluminium stocks are tied up in finance deals.

Battery material lead was at $2,194 from $2,155, having earlier hit its best level since Aug 10 at $2,196 while stainless steel-making ingredient nickel traded at $22,100 from $21,650, while

Nickel earlier hit $22,125, a peak not seen since Aug. 19, as analysts cited a combination of fund buying and rising demand from Chinese steel mills.

Zinc was at $2,188 a tonne from $2,174 and tin was at $21,475 a tonne from $21,425.

Metal Prices at 1330 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2009 Ytd Percent

move COMEX Cu 352.35 3.30 +0.95 334.65 5.29 LME Alum 2165.00 20.00 +0.93 2230.00 -2.91 LME Cu 7721.00 86.00 +1.13 7375.00 4.69 LME Lead 2182.00 27.00 +1.25 2432.00 -10.28 LME Nickel 21950.00 300.00 +1.39 18525.00 18.49 LME Tin 21425.00 0.00 +0.00 16950.00 26.40 LME Zinc 2177.00 3.00 +0.14 2560.00 -14.96 SHFE Alu 15570.00 30.00 +0.19 17160.00 -9.27 SHFE Cu* 59880.00 -40.00 -0.07 59900.00 -0.03 SHFE Zin 17620.00 -65.00 -0.37 21195.00 -16.87 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Editing by James Jukwey)

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