Copper rose to its highest price in nearly four months on Friday, driven by hopes for more quantitative easing in the United States, China's approval of a multi-billion dollar infrastructure programme and the European Central Bank's plan to shore up its region's economy.
Data showed US jobs growth slowed more than expected in August, setting the stage for the Federal Reserve to pump additional money into the sluggish economy next week. Non-farm payrolls increased only 96,000 last month, against an expected 125,000. In China, the world's largest consumer of copper, the green light was given earlier for 60 infrastructure projects worth more than $150 billion. The move is expected to energise an economy mired in its worst slowdown in three years. Copper is used heavily in construction and power cables.
The news came after the European Central Bank on Thursday announced a potentially unlimited bond buying plan, which is expected to lower the borrowing costs of indebted countries like Spain and Italy and ease fears over the future of the euro. "Prices are rising in anticipation of a potential policy response to a weak situation. There is nothing fundamentally to warrant the rise in prices, absolutely nothing. If stimulus doesn't come or doesn't work, then these markets are rising on air," said Macquarie analyst Duncan Hobbs.
Three-month copper on the London Metal Exchange ended at $7,990 a tonne, from a last bid of $7,700 on Thursday, having earlier hit the psychologically important $8,000 a tonne, its highest since mid-May. Reuters data showed copper's 100-day moving average at $7,665, meaning the current prices are well above this closely watched technical level. Aluminium, zinc and lead also hit multi-month highs.
Fed Chairman Ben Bernanke last week said the labour market's stagnation was a "grave concern," a comment that raised expectations for a further easing of monetary policy as soon as the central bank's meeting next Wednesday and Thursday. Helping copper, the euro climbed to a near four month high against the dollar, cheered by the prospect of more quantitative easing in the US, and by the ECB plan to address bond market distortions. The stronger euro makes copper and other commodities priced in dollars more affordable for European and other non-US investors.
"This (ECB) plan averts disaster, for now, rather than any long-term sustainable strategy. But that's fine, that's all that's really required at the moment," said Marex macro strategist Guy Wolf. "If China and the US are supportive for copper, Europe only matters to the extent that is it going to implode or not." China's plan to build highways, ports and airport runways, is among the most ambitious unveiled in the country this year, and signals a growing intent to bolster economic growth as the country's once-a-decade leadership change looms.
Three-month tin was last bid at $19,950 per tonne from $19,725 at the close on Thursday. The metal has fallen around 24 percent since February. Refined tin shipments from Indonesia dropped 32 percent in August from the previous month, a trade ministry official said on Friday, as the current low prices for the metal continued to limit supplies from the world's top exporter.
Three-month zinc ended at $1,970 per tonne, its highest in nearly four months and up more than 3 percent from Thursday's close of $1,940. Sister-metal lead ended at $2,092 from $2,048, having also hit a near four-month high of $2,100. Aluminium was last bid at $2,022 a tonne from $1,975, having hit its highest in more than three months at $2,034, and nickel ended at $16,500 from $16,060.