US copper futures climbed to their highest levels in two weeks early on Thursday, with strong Asian buying overnight and expectations of a US rate cut next month improving the metal's recently battered sentiment, analysts said.
Comments made by Federal Reserve Vice Chairman Donald Kohn on Wednesday, signalling a deliberate shift in the tone of policy toward further US interest rate cuts, was cheered by investors on Wall Street, sending the Dow Jones industrial average up 2.55 percent. That bullish optimism set the tone for copper's two-day rally, they said.
"It is reflecting that the Fed is going to continue to act aggressively in terms of a further rate cut," said Steve Platt, metals analyst with Archer Financial Services in Chicago. "There's even some talk of it being as much as a half percent trying to stabilise the housing and construction industry. That in itself has touched off some buying interest," Platt added.
Copper for December delivery was up 5.80 cents to $3.0640 a lb by 10:53 am EST (1553 GMT) on the New York Mercantile Exchange's Comex division, back-pedalling from an earlier peak of $3.1125, which marked its highest level since November 19. Most-active March futures firmed 6.10 cents to $3.0950, moving between $3.0350 and $3.1460.
Platt eyed resistance, basis the March copper contract, at around the $3.15 to $3.18 area. By 10:00 am, volumes were estimated at 7,286 lots. In a separate report, sales of new single-family US homes rose 1.7 percent in October while the median sales price dropped sharply and the inventory of homes fell slightly.
On the labour front, a four-month strike at Grupo Mexico's giant Cananea copper mine could drag on into 2008, causing a slowdown in investment for new projects, the company said on Wednesday.
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