Copper hit its highest in more than a month, jumping more than 6 percent as investors welcomed a long-awaited deal agreed by European leaders to contain the debt crisis and on hopes China will loosen its monetary policy and boost growth.
Strikes at Freeport McMoRan Copper & Gold Inc mines in Peru and Indonesia were also fuelling concerns about supply tightness and supporting copper prices, which were on track for their biggest weekly gain in nearly three years at around 13 percent, according to Reuters graphics.
Benchmark copper on the London Metal Exchange (LME) was untraded at the close but bid at $8,145 a tonne compared with Wednesday's close of $7,680. The metal used in power and construction earlier hit $8,178.75, its highest since September 22. Other base metals also gained strongly, with zinc, nickel and lead all jumping more than 5 percent in the session. "Markets are feeling more confident after what seems to be progress on the European bailout and the positive US numbers as well. Markets have been waiting for some clarity over Europe for ages," said Societe Generale analyst David Wilson.
Freeport declared force majeure on some concentrate sales from its strike-hit Grasberg mine in Indonesia on Wednesday. At Freeport's Peruvian copper mine Cerro Verde, the union said late on Wednesday it had rejected a request to go into labour arbitration to end a month-old strike.
"We would argue that copper stands out within the sector from a fundamental perspective as the physical market is in short supply, a situation that is unlikely to reverse any time soon," Credit Suisse said in a research note. Hopes that top metals consumer China will ease its monetary policy and boost economic growth and metals demand also helped industrial metals.
Many market watchers expect the People's Bank of China (PBOC) will begin to loosen its tight liquidity policy by year-end as China's economic growth slows, while hopes run high that inflation has peaked. China is the world's largest importer of copper and consumes about 40 percent of the metal global supply.
Confirming improving demand for copper, inventories at warehouses monitored by the LME fell for the fifth consecutive day, by 2,750 tonnes to 434,675 tonnes, latest data showed. Copper stocks have fallen by about 8 percent since the beginning of the month. Among other metals, aluminium ended at $2,255 from $2,215 a tonne at the close on Wednesday, after reaching its highest since September 22 earlier in the day at $2,295 a tonne.
"We believe aluminium prices, along with the rest of the complex, should find support on the back of renewed demand for riskier assets stemming from encouraging developments on the Greek debt crisis," said Metal Bulletin Research analyst Kamil Wlazly. "The upside, however, is likely to be capped by softening demand in China, high global inventories and lack of constraints on supply."
Tin closed up at $22,050 from $21,375 while zinc, used to galvanise steel, ended at $1,945 from $1,855 at Wednesday's close, having reached a ten-day high earlier in the session. Battery material lead closed at $2,039 from $1,924 and nickel ended at $19,900 from $19,125 a tonne.
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