BLBG: Copper Gains in N.Y., Ends Skid as Rescue Plan Passes Into Law
By Millie Munshi
Oct. 3 (Bloomberg) -- Copper rose in New York, halting a five-session slide, as U.S. lawmakers passed a bank rescue plan designed to unlock credit markets and revive economic growth.
Congress approved the $700 billion measure, reversing a vote earlier this week, to provide financial companies with a way to unload illiquid assets and boost investor confidence. The vote followed a report of the worst U.S. job losses in five years. Copper tumbled 16 percent in the previous five sessions on concern that a global economic slump may reduce demand.
The market was poised for ``a substantial `relief rally' should the House pass the revised proposal,'' Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said in a report today before the bill passed.
Copper futures for December delivery climbed 6.25 cents, or 2.4 percent, to $2.69 a pound on the Comex division of the New York Mercantile Exchange.
President George W. Bush signed the rescue measure into law, praising today's vote in the U.S. House of Representatives. The House approved the proposal in a 263-171 vote, four days after rejecting an earlier version.
``The market is really looking at this rescue plan today and copper is moving up on the hope that it passes,'' Matthew Zeman, a trader at LaSalle Futures Group in Chicago, said before the vote. ``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 still slumped 13 percent this week, the worst week since at least 1988.
U.S. employers cut 159,000 jobs in September, the most in five years, the Labor Department said today, 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 today in a report.
Citigroup Inc. this week cut its 2009 copper forecast by 23 percent, saying the metal will average $3.65 a pound next year. The price has averaged $3.56 this 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 $160, or 2.7 percent, to $6,010 a metric ton ($2.73 a pound). The price has 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.