Copper edged up on Friday, rising for a second session as traders bet that easier lending could improve demand from top consumer China as concerns linger about falls in mine output. Gains were limited however, as the dollar rose against the euro, heading back towards this week's 12-year highs on the back of the European Central Bank's bond-buying and the US Federal Reserve's expected rate increase.
A strong dollar makes dollar-priced metals costly for non-US investors. Copper was supported by Chinese data showing that the country's banks extended 1.02 trillion yuan ($162.87 billion) of new loans in February, well above market expectations. Three-month copper on the London Metal Exchange closed 0.2 percent firmer at $5,855 a tonne, having earlier climbed to $5,900, the highest since March 3.
Copper has staged a modest recovery from January's 5-1/2 year low of $5,339.50 on bets that China will experience a seasonally strong second quarter and as analysts continue to trim surplus forecasts. "There's doubt that the (copper) surplus is going to emerge ... given the reductions last year from miners, the run-rate disruptions this year and the price-related cutbacks and closures," Macquarie analyst Vivienne Lloyd said.
Weighing on prices, however, was data showing that copper stocks in Shanghai Futures Exchange warehouses rose 9.4 percent from last Friday to 224,340 tonnes, though bullish investors see the increases as priced in at current levels. Across other metals, lead slid 2.2 percent to end at $1,777 a tonne after daily data showed LME stocks rose 16,100 tonnes to 228,700, their highest since December last year.
Nickel ended 1.6 percent higher at $14,125 a tonne and looked set to register a weekly decline of nearly 2 percent. Commerzbank was upbeat about Indonesia's nickel sector. "The government in Indonesia appears to be seeing its first successes with the mineral ore export ban that came into force at the beginning of 2014," it said in a note. "Eleven nickel smelters will be built in the country by the end of 2016. They have annual production capacities of 6,000 tons of refined nickel, 66,000 tons of ferronickel and 50,000 tons of nickel pig iron." Aluminium gained 1.4 percent to finish at $1,772 a tonne, zinc added 0.2 percent to $2,011 a tonne and tin gained 0.5 percent to $17,310 a tonne, recovering after hitting its weakest since July 2012 on Thursday.
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