BLBG: Copper Gains in N.Y., Ends 5-Day Slump as Rescue Plan May Pass
By Millie Munshi
Oct. 3 (Bloomberg) -- Copper rose in New York, halting a five-session slide, on speculation that U.S. lawmakers will pass a financial rescue package designed to revive economic growth.
At least 23 members of the U.S. House of Representatives now say they favor a $700 billion rescue plan after they voted against a similar bill earlier this week. On Oct. 1, the Senate approved a modified version of the measure. Copper tumbled 16 percent in the previous five sessions on concern that a global economic slump may slash demand for raw materials.
The market ``could be in for a substantial `relief rally' should the House pass the revised proposal,'' Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said today in a report.
Copper futures for December delivery climbed 7.25 cents, or 2.8 percent, to $2.70 a pound at 12:17 p.m. on the Comex division of the New York Mercantile Exchange.
The Bush administration issued a statement today saying it ``strongly supports and urges swift House passage'' of the proposal, which aims to loosen frozen credit markets by giving lenders a way to unload illiquid assets. The House is scheduled to vote on the plan later today.
``The market is really looking at this rescue plan today and copper is moving up on the hope that it passes,'' said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. ``If it does pass, hopefully it will help the economy overall and that would be good for copper demand.''
Still, ``any gains in copper are going to be fairly limited given the slower-growth atmosphere we have,'' Zeman said. ``Until the economic picture turns around, copper cannot move a lot higher.''
The metal slumped 15 percent this week before today and still is headed for its worst week since June 1996, Bloomberg data show.
U.S. employers cut the most jobs in five years in September, the Labor Department said today. The U.S. lost 159,000 jobs last month, the data show, signaling the economy may be heading for a recession.
``This rapid deterioration in macroeconomic conditions has negative repercussions for the demand outlook,'' analysts at Barclays Capital in London said in a report today.
Citigroup Inc. this week cut its 2009 copper forecast by 23 percent, saying the metal will average $3.65 a pound next year.
``We regard current conditions to be a severe correction amid a secular bull market,'' the bank said in a report.
On the London Metal Exchange, copper for delivery in three months added $130, or 2.2 percent, to $5,980 a metric ton ($2.71 a pound). Before today, the price dropped 28 percent in the past 12 months.
To contact the reporter on this story: Millie Munshi in New York at firstname.lastname@example.org.