Copper prices surged to their highest levels in more than a week on Wednesday, lifted by a stronger euro and optimism Greece will be able to secure a bailout package aimed at averting a disorderly default.
Benchmark copper on the London Metal Exchange (LME) rose to $8,590 a tonne at 13:22 SA time, up 1.4 percent from a close of $8,481 on Tuesday.
The metal used in power and construction earlier climbed to $8,633 a tonne, its highest level since January 27.
Greek parties will try yet again to strike a reform deal in return for a new international rescue to avoid a chaotic default, after leaders in the coalition of Prime Minister Lucas Papademos postponed what was supposed to have been a crunch meeting on Tuesday until the following day.
The optimistic tone in financial markets helped the euro rise to a two-month high versus the dollar, giving a boost to metals prices as a weak dollar makes commodities priced in the US unit cheaper for holders of other currencies.
“Base metals are very macro sensitive. The mood in the broader market has improved today and the market is grasping at any bit of positive news,” VTB analyst Andrey Kryuchenkov said.
“At the moment base metals' correlation to equity markets is quite strong. And the dollar is near its December lows against a basket of currencies.”
Copper has rallied almost 12 percent so far this year and was within reach of a four-month high of $8,679.50 hit on January
27.
Elsewhere, nickel hit a fresh five-month high, and tin rose to its highest level in six months.
Markets will be closely watching data out of China for indications on the health of the world's second-largest economy amid a festering euro zone debt crisis.
China's imports of key commodities, including crude oil, copper and iron ore, are set to have fallen in January as factories shut during the Lunar New Year break, analysts said, cautioning that the outlook for most industrial commodities was bleak.
China is the world's top copper consumer, accounting for around 40 percent of refined copper demand last year.
“Particular focus will be given to Chinese inflation numbers. A further deceleration in inflation could open the door for additional cuts in the Reserve Requirement Ratio by the People's Bank of China,” Credit Suisse analysts said in a note.
“This in turn would be good news for cyclical assets such as industrial metals.”
BHP BILLITON
In industry news, BHP Billiton, the world's biggest miner, reported a rare fall in earnings, hurt by labour battles and weaker commodity prices, but the result showed it was still in a different league from its would-be rival: Glencore-Xstrata.
In other metals, aluminium rose to $2,274 a tonne, from a close of $2,255 on Wednesday.
Aluminium stocks rose to a fresh record high of 5,031,250 tonnes, with 13,450 tonnes flowing into Vlissingen.
Total cancelled warrants for aluminium stood at 60,500 tonnes.
Zinc, used in galvanising, rose to $2,142.75 from $2,120, while tin was at $25,410 from Tuesday's close of $25,495. It earlier hit its highest level since early August at $25,825.
Battery material lead climbed to $2.224.50 from $2,186 and stainless steel ingredient nickel was at $21,967 from $21,800, earlier hitting its highest level since early September at $22,150. - Reuters