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15th March 2007, 19:07
Updated: New York, Mar 15 20:05London, Mar 16 00:05Tokyo, Mar 16 09:05




Copper Rises Most in 8 Months on China Demand, Equity Rebound

By Halia Pavliva

March 15 (Bloomberg) -- Copper prices in New York jumped the most in eight months on signs of improved demand in China, the world's largest consumer of the metal, and as global equities gained.

China said its industrial production accelerated in the first two months of 2007, topping analysts' forecasts in February and signaling increased demand for copper wire and pipe. Stock markets in the U.S., Europe and Asia posted increases as concerns eased that rising U.S. mortgage delinquencies will damp demand.

``With the global equity markets rebounding sharply, metals are charging out of the gate,'' Edward Meir, a commodities analyst at Man Financial Inc. in Darien, Connecticut, wrote in a report. ``Constructive macro and trade data out of China today have also helped.''

Copper futures for May delivery rose 16.2 cents, or 5.7 percent, to $2.988 a pound on the Comex division of the New York Mercantile Exchange, the biggest gain for a most-active contract since July 6. Copper has gained 33 percent in the past 12 months.

Freeport-McMoRan Copper & Gold Inc., owner of the world's second-biggest copper mine, advanced with the price of the metal. Shares of the New Orleans-based company rose $3.93, or 7 percent, to $60.31 as of 2:23 p.m. A close at that price would be the biggest gain since June 29.

``The copper market is strong today on apparent strength in China along with technical movement to test $3 a pound,'' said Warren Gelman, president of Kataman Metals in St. Louis.

`Limited' Downside Risks

``Base metals have been the best performing asset class over the last three weeks,'' said John Kemp, a London-based analyst with Sempra Metals Ltd. ``Most investors have concluded that downside risks are limited, at least in the near term, even if the global economic and financial environment deteriorates somewhat.''

Copper prices may reach $3 a pound soon, after breaking through the $2.90 resistance level, said John Gross, director of metals management at Scott Brass Inc. in Cranston, Rhode Island. ``It could be today,'' he said.

``The market is in technical correction after copper fell from $3.50 a pound in October to $2.40 five weeks ago,'' Gross said. ``The market does not move in one direction indefinitely.''

China's industrial output rose 18.5 percent in January and February, the National Bureau of Statistics said today, after gaining 14.7 percent in December. That beat the 15 percent median estimate of 20 economists surveyed by Bloomberg News and is the fastest pace in eight months.

Growth in China

``China continues to grow strongly despite the government's efforts to cool the growth rate,'' Kemp said, adding that China probably bought enough metal ``for at least the next two months'' earlier this year.

China's economy expanded last year by almost 11 percent, the most since 1995.

Asia buys about 50 percent of the 17 million metric tons of copper sold annually. The U.S. buys about 13 percent of copper sold each year and China buys 20 percent, according to Prudential Equity Group LLP.

``Out of China, there are no signs of slowing growth at all,'' Meir said in the report. Amid concerns that economic growth in the U.S. may slow, copper market participants ``are instead focusing on the Chinese economy,'' he said.

Yesterday, regional indexes in Asia and Europe declined the most since a slump two weeks ago that wiped $3.3 trillion off the value of markets worldwide.

Copper stockpiles monitored daily by the London Metal Exchange declined 0.8 percent to 196,125 metric tons, the lowest since Jan. 23. The inventory fell for a fifth session in a row today, the longest decline since mid-July. Copper prices have rallied 24 percent from a 2007 low of $2.385 a pound on Feb. 2.

A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.

To contact the reporter on the story: Halia Pavliva in New York at hpavliva@bloomberg.net ;

Last Updated: March 15, 2007 14:36 EDT