Copper rose on Wednesday as the euro strengthened following positive comments from China on the euro zone debt crisis and optimism Greece would be able to implement tough austerity measures needed to avert a disorderly default.
Three-month copper on the London Metal Exchange rose 0.6 percent to $8,462 a tonne by 11:58 SA time, from Tuesday's close of $8,415 a tonne.
The euro rose against the dollar after China's central bank governor said the country would play a bigger role in solving Europe's problems and would continue to invest in euro zone government debt, while calling on Europeans to produce more attractive investment products for China.
A weak dollar makes commodities priced in the US currency cheaper for holders of other currencies.
“The one thing that is changing the perspective in the market today is comments from China indicating that they will be prepared to help,” said Nic Brown, head of commodity research at Natixis.
“It suggests very much that Europe is a problem, and if it can be fixed in any way, then the rest of the world is perceived to be doing quite well.”
European Central Bank board member Joerg Asmussen said on Wednesday Greece can meet the conditions for finance ministers to agree a second aid package at their meeting next Monday, which would then permit a sovereign bond swap to be completed in time.
Euro zone finance ministers dropped plans on Tuesday for a special face-to-face meeting on Greece's new international bailout, saying political party chiefs in Athens had failed to provide the required commitment to reform.
Copper had fallen from a five-month high last week, but it is still up more than 11 percent so far this year.
“Generally speaking, the increase in metal prices since the beginning of the year would appear excessive - virtually all metals have seen two-digit growth rates so far - so a correction would not surprise us,” Commerzbank analysts said in a note.
CHINA DEMAND
Demand in China, the world's top copper consumer, has yet to pick up after its week-long Lunar New Year holiday late in January, in part due to lower order
visibility on products for export to debt-laden Western economies.
January's total imports were 18.7 percent lower compared with a record high of 508,942 tonnes in December as public holidays slowed trade. Refined copper imports for January will be announced next week.
“The market is still waiting for signs of improving physical demand in China, which has remained muted since the Lunar New Year period,” Credit Suisse analysts said in a note.
China is likely to import less refined copper from the spot market in February and March due to plentiful stocks and weak demand, which are also weighing on Shanghai prices, industry sources said earlier this week.
“China's physical market is very soft. There's a few cheeky bids around where people are happy to pick up things at low premiums, but it doesn't mean the business is actually happening,” said a trader based in Singapore.
Aluminium rose to $2,230 from Tuesday's close of $2,215. Zinc , used in galvanizing, climbed to $2,039 a tonne from $2,032 on Tuesday, while nickel rose to $20,331 from $20,150.
Battery material lead climbed to $2,084 from $2,074.50 while tin rose to $24,600 from $24,350. - Reuters