Copper prices jumped to a two-month high on Friday after Chinese inventories fell for the first time in two months, a signal that demand in the top metals consumer is slowly recovering after a holiday. Prices also gained support from a fall in the dollar and supply concerns as a blockade of the Grasberg mine in Indonesia marked its fifth day.
Three-month copper on the London Metal Exchange jumped 2.3 percent to $5,986 a tonne by 1433 GMT, the highest since January 13 and extending a gain of 3.2 percent on Thursday.
The contract erased early losses after weekly data showed copper stocks in warehouses monitored by the Shanghai Futures Exchange (ShFE) fell 2,267 tonnes or 0.9 percent, the first drop since January 23.
Shanghai copper stocks, which have more than doubled this year, were being watched for signals about whether industrial users had geared up following the Lunar New Year holiday.
"There was a lot of anticipation about ShFE stocks. The consensus view from Asia was that if it was a gain of over 10,000 or 20,000 tonnes, it would be a bearish signal," said analyst Vivienne Lloyd at Macquarie in London.
"Since it actually dipped by a couple of thousand tonnes,
that was considered to be a good buying signal and they are going to take that as a sign of real demand."
A decline in LME copper stocks also supported prices, while the wider metals market benefited from a 1 percent fall in the dollar index, largely due to indications the US Federal Reserve was less likely to raise interest rates aggressively.
A weaker US currency makes dollar-denominated assets such as metals cheaper for buyers holding other currencies.
The blockade at Grasberg in Indonesia, one of the world's biggest copper mines, also helped to bolster prices.
"Supply out of Indonesia is still a factor," a trader said. Workers began blocking a road into the Freeport-McMoRan Inc mine on Monday to protest against a settlement reached with other employees at the end of a previous dispute.
But the mine has stockpiles of copper concentrates ready for shipment at a port, according to union officials representing workers, reducing any near-term supply impact.
Among other metals, aluminium lagged with a gain of just 0.1 percent to $1,782 a tonne after LME stocks jumped by nearly 24,000 tonnes, a signal that a supply glut was not abating.
Nickel surged 2.3 percent to $14,085 a tonne as traders said the metal was still finding support from trade data showing a global nickel surplus fell 70 percent between December and January.
Zinc added 1.2 percent to $2,044 a tonne, lead gained 2.5 percent to $1,753 and tin climbed 1.3 percent to $17,200.
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