RTRS: Copper hovers at 13-½ month high as dollar eases
By Manolo Serapio Jr.
MANILA (Reuters) - London copper futures touched fresh 13-½ month peaks on Wednesday and Shanghai prices added to the previous session's gains as a softer dollar offset poor U.S. industrial output data.
The dollar eased versus a basket of currencies - making dollar-priced commodities cheaper for overseas currency holders - after early gains spurred by comments from euro zone economic policymakers about the merits of a strong dollar.
"There's speculative buying in Shanghai and I heard Western funds are closing short positions," said a metals trader in Shanghai.
Copper prices have risen more than 120 percent this year, riding on the strength in global equities, the dollar's weakness and growing expectations for demand to pick up strongly in 2010.
Three-month copper on the London Metal Exchange rose $14 to $6,840 a tonne by 0254 GMT, after hitting a high of $6,875, its best level since late September.
Shanghai's benchmark third month copper added 250 yuan to 53,450 yuan a tonne. The contract rose as high as 53,720 yuan, near the 14-month peaks touched on Tuesday.
Investors are eyeing U.S. data, including housing starts and consumer inflation for October, due later on Wednesday, for more trading cues.
But with recent mixed global economic data suggesting the recovery from a severe recession may be protracted as governments unwind stimulus measures, base metals prices could be due for a retracement.
"Investors' optimistic assumptions on the world economy should have been fully priced in by now," Commerzbank said in a research note.
"Hence, we see considerable risk of a downward price correction."
U.S. industrial output barely rose last month and wholesale inflation was tame, suggesting the economy's recovery from a severe recession was losing some steam.
Also helping to cap prices is the continuing rise in base metals inventories, with copper stocks on LME rising to 410,000 tonnes, the highest since late April.
Copper inventory in Shanghai warehouses stands at 104,939 tonnes, a new 5-1/2-year high.
