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jadedragon
Administrator
Canada
3788 Posts |
 Posted - 09/03/2008 : 15:45:08
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Thursday September 4, 3:47 AM
Bargain hunters lift copper, strong dollar caps
* Bargain hunting lifts industrial metals
* Strong dollar, weak oil cap gains
* Copper stocks up 30 percent on year ago (Updates with New York closing copper prices, adds analyst comments)
By Julie Crust and Humeyra Pamuk
LONDON, Sept 3 (Reuters) - Copper prices gained 1 percent on Wednesday as bargain hunters took advantage of lower prices following declines triggered by a stronger dollar.
But a fall in oil prices and the dollar's strength against the euro, coupled with rising inventories highlighting demand worries, capped further gains. ADVERTISEMENT
Copper for delivery in three months on the London Metal Exchange -- often seen as a key gauge of real economic activity -- ended the day at $7,345 a tonne, up $75 from Tuesday. The metal had lost 8.5 percent in just over a week.
"It's opportunistic buying right now," analyst Eugen Weinberg at Commerzbank in Germany said. "Some of these metals reached to levels which are now attractive to bargain-hunters."
In New York, copper for December delivery closed up 3.90 cents at $3.3120 a lb on the New York Mercantile Exchange's COMEX division.
"I think what we're seeing today is just a dead cat bounce," said Scott Meyers, senior trading analyst with Pioneer Futures in New York. "I still think we are in a corrective phase, along with the energy markets."
Industrial metals got hammered this week as the dollar strengthened and oil fell sharply after the threat from Hurricane Gustav passed.
The U.S. dollar surged to its highest level against the euro since January, extending its recent bull run on growing expectations the American economy would outperform that of Europe.
A firm U.S. currency makes dollar-priced metals more expensive for holders of other currencies.
"It is pretty much in the hands of the dollar and oil, providing a cue for direction in the absence of consumer demand," said Robin Bhar, analyst at Calyon, the corporate banking arm of Credit Agricole S.A..
"The fundamentals are still reasonably OK, but probably won't reassert themselves until industrial activity picks up again at some stage over the next few weeks," he said.
However, rising metal inventories, which added to concerns about global demand, exerted downward pressure. Stocks of copper, used in construction and power cables, rose 725 tonnes to 180,525 tonnes, the highest level since January and a 30 percent gain on a year ago.
Aluminium -- used mainly in transport, packaging and construction -- fell to $2,675.5 a tonne, from $2,695, and was close to six-month lows.
Inventories in LME warehouses jumped 2,650 tonnes to 1.17 million tonnes, the highest level since April 2004. The dollar added pressure on prices.
FUND CLOSURE
Dealers expected prices to be volatile, especially after U.S. hedge fund Ospraie Management LLC said it was shutting its flagship product after a 27 percent loss in August. [ID:N02450789]
"We have seen signs of liquidation of popularly owned commodity trades recently, and there has to be a risk that this continues," UBS analyst John Reade said in a report.
Tin was bid at $19,350/19,400, up from Tuesday's last quote of $19,150/19,200. The metal rose as much as 3.4 percent to $19,800, boosted by concern about demand weakness and stock levels close to three-year lows.
LME zinc , mainly used to make steel, was at $1,787.5/1,788, up from $1,775 per tonne on continuing concerns about oversupply.
Lead closed at $1,950 a tonne, up from $1,909 on Tuesday. LME stocks fell 700 tonnes to 79,150, the lowest level since June 10.
Nickel ended the day at $19,550/19,600 versus $19,450. (Additional reporting by Chris Kelly in New York; Editing by Walter Bagley)
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