New York copper jumps nearly 7 percent, China factor fades

Copper futures in New York rallied 6.7 percent, settling near their session highs on Friday, as the market rebounded from a sell-off on Thursday that was called an overreaction to China's surprise interest rate hike.
Benchmark December copper on the New York Mercantile Exchange's Comex division ended up 8.40 cents at $1.3375 a lb., trading from $1.2540 to $1.3385. This was the highest level for the contract since October 13, when prices plummeted almost 12 percent, retreating from a 16-year peak three days.
Spot November shot up 9.00 cents to finish the day at $1.3475 a lb.
Final estimated copper futures volume was 25,000 lots. Copper futures opened firmer following overnight buying in China, the world's largest consumer of the red metal. Traders said the market's negative reaction on Thursday to China's first interest rate increase in almost 10 years to cool its red-hot economy was a bit overdone.
"China's demand is still growing for copper. Their economy is going to slow from 8 percent to 7-1/2 percent, so big deal," said one analyst. On Thursday, giant US copper miner Phelps Dodge said that rampant demand from China's booming economy would continue to lead growth in global copper consumption in the fourth quarter.
Copper demand in China, which consumes almost a fifth of the world's supply of the metal, was forecast to rise 9 to 10 percent next year, compared with around 8.5 percent in 2004. Meanwhile, a softer-than-expected US third-quarter gross domestic product weakened the dollar and buoyed buying interest in copper.
"The GDP data out this were more neutral but, if anything, neutral news right now will be supportive to the market," said one analyst.
The US third-quarter expansion of gross domestic product, the measure of total output within the nation's borders, grew at a 3.7 percent annual rate, slightly lower than economists' forecasts for a rise of 4.2 percent.
The dollar fell against the euro and extended its losses throughout the day after the GDP data. On the London Metal Exchange (LME), copper prices rose almost 5 percent on technical buying and short covering.
Three months copper settled at $2,882, up $130, or 4.7 percent.