Copper hits 7-1/2 month high on trade hopes, sliding stocks

LONDON: Copper prices climbed to their highest since last July on Friday as inventories tumbled and investors bet on a US-China trade deal.

Optimism over a trade deal has been rising as top US and Chinese trade negotiators haggled over the details of a set of agreements aimed at ending their trade war.

"Copper is getting a lot of momentum from the trade talks. If we get a deal, there wouldn't be much obstacle for copper to return to the low $7,000s," said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.

Benchmark copper on the London Metal Exchange has broken the key level of $6,400 a tonne, which marks the upper boundary of a range that has held for the past six months, he added.

"If this confirmed today on the weekly chart with a close above $6,400, it would mark the start of new bull cycle for copper."

LME copper rose 1.2 percent to $6,458 a tonne in official open-outcry trading, its highest since July 4.

The metal, widely used in construction and manufacturing, is on course to post a 4.5 percent gain this week, which would mark its biggest weekly jump since the week ended Sept. 21 last year.

* COPPER STOCKS: On-warrant LME copper inventories, those not earmarked for delivery, slumped by nearly half to 39,800 tonnes in one day, the lowest since August 2005, LME data showed on Friday.

* COPPER BALANCE: The global refined copper market showed a 52,000 tonne deficit in November, compared with a 1,000 tonne surplus in October, the International Copper Study Group said.

* ALUMINIUM: LME aluminium traded 0.3 percent firmer to a two-week high of $1,911.50 a tonne in official rings while aluminium on the Shanghai Futures Exchange climbed as much as 1.3 percent to 13,695 yuan a tonne, its highest since Dec. 28.

Recent gains have been driven by speculators covering short positions, Alastair Munro at broker Marex Spectron said in a note. The LME net speculative short position accounted for 17.6 percent of open interest, according the Marex estimates.

* NICKEL: LME nickel was the biggest gainer on the LME, rising 1.3 percent to a two-week high of $13,015 a tonne after on-warrant LME inventories fell to 128,580 tonnes, the lowest since February 2013.

* PRICES: Zinc rose 0.6 percent to $2,698 a tonne in official trading, lead added 0.2 percent to $2,070 and tin, untraded in official activity, was bid down 0.4 percent at $21,350.