Copper fell on Friday as escalating violence in North Africa boosted oil prices, fuelled inflation worries and depressed risk appetite, but upbeat US jobs data lent some support. Three-month copper on the London Metal Exchange closed at $9,895 a tonne, from a last bid of $9,910 a tonne on Thursday.
"Clearly with the political uncertainty in the MENA (Middle East North Africa) region, people want to keep risk under control before the weekend," said Credit Agricole analyst Robin Bahr. "Rising oil prices may derail economic growth and hit demand for industrial metals," he added. Tensions have run high in markets as a wave of unrest has spread across the Middle East and North Africa this year As the violence in Libya intensified, oil prices jumped on Friday, adding to concerns over rising inflation.
US crude prices jumped to their highest since September 2008, and Brent rose above $116 a barrel as heavily armed rebels clashed with forces loyal to Muammar Gaddafi near the oil terminal of Ras Lanuf Nonetheless, positive economic data was capping losses. US February non-farm payrolls rose by 192,000 jobs, slightly higher than expectations at 185,000.
Friday's figures added to a recent spate of upbeat data from the world's biggest economy, including data on jobless claims and US services sector on Thursday. "It's a cautious, slow trickle of better figures, but people are still cynical," a trader said. Also weighing on the market, stocks of copper in LME warehouses last rose 1,250 tonnes to 425,300 tonnes, their highest level since last July as traders cited weakening physical demand.
"We would argue that industrial metals may find it difficult to break higher in the near term as long as inventories do not register meaningful outflows again," Credit Suisse said in a note. The growing piles of metal have moved the copper curve into an $8.50 contango - a discount for cash versus three-month material - from a $70 backwardation, or the premium for cash over three-month material, in mid-December.
Aluminium stocks climbed 7,250 tonnes to 4,606,200 tonnes, within reach of a record high 4,640,750 hit in January 2010. Aluminium finished at $2,600, from a last bid of $2,611 on Thursday. Zinc ended at $2,461 a tonne from $2,512 at the close on Thursday, and battery material lead closed at $2,630 a tonne from a close of $2,619 a tonne. Tin finished at $31,850 from $31,650 a tonne. Nickel closed $28,800 from $28,860 a tonne.