Copper prices climbed to their highest in four months on Friday after US data showed strong jobs growth combined with low wages, lessening the threat of a early interest rate rise. Average hourly earnings fell three cents in February even as non-farm payrolls increased by 242,000 jobs last month. Dampened worries about a Fed hike sent the dollar index to a two-week low, making metals priced in the US currency cheaper for buyers outside the United States.
That encouraged a scramble by funds to buy copper and triggered pre-set buy orders after copper broke through key levels, a trader said. "Upside momentum is keeping the buy signal going. It's nearly all fund buying - both short-covering and fresh longs," he said. Benchmark copper on the London Metal Exchange surged 3.5 percent to close at $5,027 a tonne after touching $5,059, its highest since November 5. It scored a weekly gain of nearly 7 percent, the most since December 2011.
Industrial metals have been bolstered by stronger equity markets around the world, firmer oil prices and a softer US currency. Investors are also hopeful that an annual meeting of China's parliament starting on March 5 will announce measures to boost economic activity. "The upswing is overdue, we feel the cycle of copper restocking is just under way, but manufacturers will buy cautiously," said SP Angel analyst John Meyer. "We expect copper and zinc to lead the way, mainly due to production cuts. There will be some high cost players going out of business, which will cut supplies."
Three-month zinc gained 0.8 percent to end at a five-month high of $1,857 a tonne. Expectations of a market in balance, perhaps even deficit, due to output curbs and mine closures have helped zinc rise nearly 15 percent this year. "Cutbacks in high-cost operations are expected to see a supply pullback lifting prices modestly by 2017," HSBC analysts said in a note. "The least oversupplied commodities and those used in higher value-added products should be the best performers, including copper, nickel and zinc."
Nickel jumped 3.8 percent to finish at $9,340 a tonne, the strongest since November 17. However, high inventories are likely to create headwinds for nickel prices. Stocks of nickel in LME approved warehouses, though falling in recent weeks, are still at 431,874 tonnes, up nearly 10 percent since early December. Lead marched 1.5 percent higher to close at $1,866 after hitting $1,883, the highest since June 11, while aluminium rose 0.6 percent to $1,587. Tin surged 3.2 percent to end at $17,000, the highest in 11 months. Worries about supplies and low inventories are behind tin's gains of around 15 percent this year.
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