Copper recovers

Copper was up slightly on Friday as a weak dollar helped prices recover from an earlier drop to a 10-day low on initial disappointment of investor hopes for fresh stimulus to boost the sluggish US economy. Federal Reserve Chairman Ben Bernanke said in a speech the central bank would act as needed to strengthen economic recovery but did not explicitly signal any imminent move.
After his comments, benchmark copper on the London Metal Exchange fell to a session low of $7,498 a tonne, its lowest since August 21. It then recovered to close at $7,610 a tonne, up 0.5 percent from the close on Thursday at $7,570. The metal used in power and construction is still down around 13 percent from a year peak hit in February and has been trapped in a range of $7,300-$7,700 this month amid low trading volumes.
"Bernanke didn't say anything new. He reiterated that the Fed is ready to act if needed, but it does not want to just yet, so many people were a bit disappointed," said Andrey Kryuchenkov, a commodities analyst at VTB. "In terms of fundamentals nothing has changed. China is not really there yet in terms of demand, so it's mainly macro-trading at the moment. Investors are waiting for the next macro events, including the ECB meeting next week and the decision on a possible full Spanish bailout," he added.
Spain is negotiating with euro zone partners over conditions for aid to bring down its borrowing costs, though the country has not made a final decision to request a bailout, three euro zone sources said on Thursday. The dollar extended declines against the euro and yen on Friday after briefly paring losses on Bernanke's comments. A weaker US unit makes dollar-priced commodities such as metals cheaper for holders of other currencies.
The focus moved to the weekend, when China will release its official manufacturing managers' index (PMI). "A weak reading would increase the downside risks," Credit Suisse said in a research note. A Reuters survey showed the PMI may have eased to a nine-month low of 50 in August, which would support the case for fresh easing measures by the central bank.
In other metals, LME tin, was untraded in rings but was last bid at $19,350 per tonne, from $19,600 at the close on Thursday. The metal is on track to post a 7.17 percent fall on the week - the biggest weekly drop in almost a year. Indonesia's largest tin miner PT Timah said on Wednesday it had re-started spot sales after a three-week stoppage. That took the steam out of a rally that saw prices shoot up 13 percent last week, rising as high as $20,901, on news that more than 90 percent of Indonesian tin producers had stopped production.
"Tin is a very thin market at the best of times. The rally was looking stretched and then out came the fundamental news that was announced by PT Timah, and that was the trigger for the sharp sell-off," BNP Paribas analyst Stephen Briggs said. "When you get a piece of negative news, tin tends to drop like a stone because of the liquidity. It has begun to stabilise and I think the fundamentals are still pretty solid." Three-month lead closed at $1,965, from a close of $1,944 on Thursday, and zinc at $1,841 per tonne from $1,834. Nickel, finished at $15,950 from $15,975 and aluminium at$1,902 from $1,876.