Copper rose to its highest in nearly a week on Tuesday, after falling to three-month lows the day before, as a possible softening in Russia's stance on Ukraine eased aversion to assets perceived as risky. President Vladimir Putin said on Tuesday Russia saw no need to use military force in the Crimea region of Ukraine for now, in remarks apparently intended to ease East-West tension over fears of war in the former Soviet republic.
Many investors on Monday flocked to safe-haven assets such as gold for fear of an escalation in tensions in Ukraine. That flight to safety reversed on Tuesday, with world shares rebounding and gold falling. Three-month copper on the London Metal Exchange hit its highest since February 26 at $7,068 in intraday trade. It ended at $7,049.50 a tonne, up from a close of $6,968 in the previous day. The metal used in power and construction hit a three-month low of $6,944 a tonne on Monday.
"Base metals prices rebounded in early trading this morning with copper climbing, so it seems like it is a relief rally," Sucden senior research analyst Myrto Sokou said. "Of course Putin's announcement was an encouraging sign for the short term, but the situation hasn't cleared and I would say investors possibly are going to remain cautious." Tepid growth in developed nations and risks to emerging markets have also battered sentiment towards base metals as traders wait for industrial orders to pick up after this year's Lunar New Year holiday in Asia and for signs of a firmer US economic revival.
Manufacturing growth in Europe and Asia slowed last month, pressured by falling demand from abroad, while the United States bucked the trend, with manufacturing expanding at its fastest pace in over three years.
Buyers were on the sidelines due to the political tensions in Ukraine and also ahead of Friday's major US jobs report, given that a poor result could pile more pressure on metals. "Friday is the big event with US non-farm payrolls out. It wouldn't surprise me to see another miss on the downside given the economic weak patch recently," analyst Tim Radford with Sydney-based advisor Rivkin said.
In other metals, zinc hit its highest in a year in intraday trade at $2,124.50, while nickel hit its highest since early June at $15,167. Zinc closed at $2,121 from $2,069 on Monday, while nickel ended at $15,150 from $14,730. Tin closed at $23,305 from $22,950, lead ended at $2,137 from $2,113 and aluminium closed at $1,768 from $1,721.
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