Copper (HG-FT) rose on Wednesday as the prospect of a bailout for debt-laden Greece improved risk appetite and the U.S. dollar dipped against other major currencies.
Copper for three-months delivery on the London Metal Exchange traded at $6,630 (U.S.) a tonne at 1109 GMT from a close of $6,590 on Tuesday.
Market confidence improved after a senior German coalition source said on Tuesday that European governments have agreed in principle to help heavily indebted Greece. Global stock markets also rallied on improved risk sentiment.
However, a German government spokesman said a decision had not yet been reached.
“The market is following currencies quite closely. Currencies are flying around a lot,” said Alex Heath, head of base metals for London's RBC Capital Markets.
The U.S. dollar weakened against a basket of currencies, making dollar-priced commodities cheaper for holders of other currencies. The euro was little changed against the dollar.
“The markets are jittery about whether a financial bailout plan is going to be announced or not. You want to make sure someone stuck their finger in the dyke properly,” Mr. Heath said.
“It looks like the main strong euro partners are going to come to the aid of the weaker players. That's what the euro's all about, being part of a club and looking after members.”
China Imports Data showed China's January imports of unwrought copper and semi-finished copper products fell 21 per cent on the month, to 292,096 tonnes, but the fall was much lower than market players had estimated.
The arbitrage between Shanghai and LME copper stood around 1,500 yuan while the gap between zinc markets was about 800 yuan, both of which should encourage imports.
Analysts expected trading to quiet down in the lead up to the Chinese new year holiday that will close the Chinese market for a week from Feb. 14.
But many analysts were confident the longer-term outlook for base metals demand and prices remained strong.
“The global economic recovery is still on track, Chinese demand is still very robust, policy makers are in no rush to reduce liquidity, and many base metals are still facing structural supply shortages,” Leon Westgate, an analyst at Standard Bank, said in a note.
Aluminum (AL-FT) traded at $2,053 from $2,056.
Stocks of aluminum stand near 4.6 million tonnes, but fell 5,750 tonnes to continue a recent trend of drops that has brought stocks away from a record high above the 4.6 million-tonne level.
Zinc was at $2,130 from $2,104 and battery material lead was at $2,067 from $2,032.5.
Tin traded at $15,750 from $15,500 and nickel was at $17,914 from $17,550.
