SINGAPORE (Reuters) - Shanghai copper rose by its 5 percent daily limit Monday, chasing sharp gains in London which traded around its strongest in more than a week, fanned by comments by Fed chairman Ben Bernanke on economic recovery.
London Metal Exchange copper for delivery in three months rose more than six percent since Shanghai closed on Friday, lifted by Bernanke, who gave his clearest signal yet that a recovery is at hand and the biggest rise in sales of previously owned U.S. homes in July in nearly two years added to the bullish feeling.
"Copper is a vampire metal -- some weak data puts a stake through its heart, but a sniff of a positive number and it's back flapping its wings," a dealer in Singapore said.
"I doubt anyone in the market thinks this price is a reflection of the state of demand and supply, and from the volatility it's fairly obvious the market is being played by speculators. We need to see whether their money is here for the long haul or just short-term punting."
Benchmark third month Shanghai copper rose 2,340 yuan from Friday's settlement to 49,330 yuan, and zinc also hit its threshold at 15,530 yuan before retreating to 15,430 yuan.
Copper for three-month delivery on the LME jumped 1.5 percent to $6,363 a metric ton by 0150 GMT, having closed up 3.7 percent on Friday. Copper earlier hit $6,385, its highest in just over a week.
In the past week or so the market has traded in a near-$700 range driven up on hopes of economic recovery, then down after weak consumer sentiment data, then back up as the numbers turned more positive again.
"While we see this inconsistency in the macro economic news, prices are going to remain very volatile and I think this will last for a couple more months at least," the dealer said.
The latest steer came from China where refined copper imports fell 23 percent to 292,226 metric tons in July from June's record 378,943 metric tons, ending five months of record inflows, data from the General Administration of Customs showed.
Despite the fall, imports in the first seven months of the year were up almost 170 percent from the same period last year, at 2.07 million metric tons.
"Merchants, end-users and speculators reduced spot imports as that had no margins," Zhu Yanzhong, analyst at Jinrui Futures, said. Analysts and traders had expected July's imports to fall by between 10 and 30 percent.
Shanghai copper has tended to trade at a discount to London since early June, On Monday the benchmark contract in the eastern Chinese city was 1,500 yuan less than its LME equivalent, accounting for China's 17 percent Value Added Tax.
Copper stocks in warehouses monitored by the Shanghai Futures Exchange rose by 5,543 metric tons, or 7 percent, last week, to a two-year peak of 81,650 metric tons, and the market expects that trend to continue.
London stocks were more or less unchanged at 293,125 metric tons over the week.
Aluminum rose $20 to $1,950, while nickel, which came a little late to the party on Friday, lagging copper's rise with a gain of 2.3 percent, surged as much as $700 or 3.6 percent to top out at $20,000. By 0150 GMT, prices had ticked back to $19,805.
