Copper rose on Wednesday as investors sought value after Tuesday's three-month lows, but gains were fragile due to worries Japan's nuclear crisis and unrest in North Africa and the Middle East could hit growth. Three-month copper on the London Metal Exchange closed at $9,260 a tonne in official rings, up from $9,118 at the close of the session on Tuesday during which it hit a three-month low of $8,944.50 when equities also tumbled on the nuclear crisis, tsunami and earthquake in Japan.
Not even data showing US housing starts posted their biggest fall in 27 years in February could reverse the buying of copper and other base metals on Wednesday. "It's more risk appetite back in the market, and secondly (investors are) thinking the slump of the recent days might be overdone," Eugen Weinberg, an analyst at Commerzbank, said of copper's gains.
"From the fundamental side it's looking good for copper this year," he said. But he added that concerns other than fundamentals were playing on investors' minds: Japan's crises, high oil prices and nervy equity markets. Rising oil prices that boosted inflation concerns also raised worries about economic growth, with unrest escalating in oil-exporting Libya and in Bahrain, which is neighbour to top oil producer Saudi Arabia.
Also unnerving markets, Moody's cut Portugal's sovereign debt rating by two notches. "The twin shocks of Middle Eastern political uprisings and the largest earthquake ever to hit Japan have increased downside risks to global growth and metals prices in the short term," Barclays Capital said in a note.
Aluminium was at $2,458 a tonne, from a last bid of $2,510 on Tuesday. In LME warehouse, latest data shows that aluminium stocks fell 4,475 tonnes to 4,620,450 tonnes, but are still within sight of a record 4,640,750 tonnes hit in January 2010. Added to that are the roughly 4-5 million tonnes of aluminium off LME stock. Tin was unchanged at $28,600 a tonne, zinc was at $2,288 a tonne from $2,282 and nickel was at $24,950 a tonne from $24,705. Lead was at $2,580 a tonne from $2,505.
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