London copper extends gain

London Metal Exchange copper prices rose more than 2 percent on Monday, extending the previous sessions 3.3 percent rally on positive technical sentiment and hopes of economic recovery in China. Chinese markets are closed for a national holiday on Monday, giving players on the LME free rein to build on Fridays surge, which only developed after the closing bell in Shanghai.
"Its the usual pattern London tries to bully the price up or down so when Shanghai re-opens after a break, they are forced to cover," a trader in Singapore said. Three-month copper on the London Metal Exchange, rose 2.1 percent or $91 to $4,401, having touched $4,436 a tonne, breaking above $2 a lb for the first time since early November.
"Our technical guys see a chance for copper to go to $4,820, but from a fundamental perspective I am not sure the demand supports that," a dealer in Sydney said. Copper prices stabilised briefly just above $4,800 in late October and early November during last years collapse, creating resistance for new rallies.
"Chinese buyers are very price sensitive and I dont think they have the stomach yet for those numbers. But the very positive technicals seem to be drawing in the funds. We will watch to see if they can carry the day." Morale across markets was boosted by a week of better-than-expected data, including reports that Chinas purchasing manager index is showing growth once more, a 2.1 percent increase in pending sales of existing US homes and a better-than-expected rate of decline in US construction spending.
Even Fridays gloomy US payrolls report, showing a 663,000 fall in March and unemployment at its highest since 1983, could not undo the feel-good factor. "The market has become much less sensitive to weak economic news. The payrolls data contained a lot of negative implications for the economy," David Moore, Commonwealth Banks Commodities strategist in Sydney, said. But he said market attention was on China.
"The view is that a return to strong growth in China is likely as one of the first signs in the expected profile for recovery in other economies." Aluminium rose $22 to $1,504, and earlier touched a near-three-month peak of $1,514, while zinc rose $10 to $1,380, having hit $1,395 earlier, its highest since mid-October.