US copper futures settled at a one-week high on Friday after US payrolls data for November came in slightly better than forecast, easing some fears of recession and bolstering sentiment ahead of a Federal Reserve decision on interest rates next week, analysts said.
"The tone of the employment report seemed to turn things around a little bit," said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey. The US economy added 94,000 new jobs in November, slightly above forecasts for 90,000. However, a separate report issued by Reuters/University of Michigan showed its index of confidence fell to 74.5 so far this month, slightly below analyst forecasts and down from 76.1 in November.
Copper for March delivery ended up 7.75 cents to $3.1260 a lb on the New York Mercantile Exchange's Comex division, its highest settlement since November 30, after trading a session range between $3.0465 and $3.1550.
Final estimated futures volumes totalled 10,401 lots, better than the 8,113 lots recorded on Thursday. Open interest in Comex copper futures fell by 519 lots to 70,143 contracts as of December 6.
A 20 percent decline in Shanghai copper warehouses during the week ended on Thursday set the tone for the day, brokers said, boosting London copper prices through initial resistance levels of $6,900 and $6,925 a tonne, which in turn, fuelled the short-covering rally in New York.
"It just looked like there was some end-of-the-week short covering coming in. Funds have been fairly aggressive on the sell-side and they took a little bit in with some nervousness ahead of the Fed next week," one Comex dealer said. Federal Reserve policy-makers are widely expected to cut interest rates by at least a quarter percentage point when they meet next on Tuesday and some analysts speculate the US central bank might trim rates a more aggressive half percentage point.
O'Neill suggested the main catalyst for copper's recent bout of strength stemmed from the Bush administration's plan on Thursday to try and slow a wave of home loan foreclosures tied to adjustable-rate subprime loans.
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