Copper started the new trading week on a firmer footing Monday, extending last week's sharp rally on growing optimism for a solution to Europe's debt crisis and a soft economic landing in top consumer, China. Copper rose alongside a stronger tone in global equities after an agreement between French and German leaders to impose stricter budget discipline across the eurozone suggested the region's debt crisis was finally coming under control.
The bloc's debt crisis has been the biggest overhang for industrial metals' investors this year, crimping demand prospects for a commodity that is essential in the development of everything from housing to automobiles. Investors were also feeling upbeat about the health of Chinese consumption after Beijing moved last week to cut reserve requirements for commercial lenders for the first time in three years.
"I think there is an undercurrent of people feeling a little better about the China situation ... the ease in the reserve requirements and the potential for a soft landing," said Steve Shafer, who helps manage $300 million as chief investment officer of Oklahoma City-based Covenant Investors. In New York, the key March COMEX contract rose 3.10 cents to settle at $3.6155 per lb, after dealing between $3.5640 and $3.6360. Futures volumes were thin at the start of the week, with a little more than 33,000 lots traded in late New York business, 45 percent below the 30-day norm, according to preliminary Thomson Reuters data.