Copper shot to its highest level in two weeks on Friday, buoyed by a weak dollar, tightening supplies and upbeat economic data that offered evidence of a potential recovery in the global economy.
A surprisingly strong improvement in U.S. consumer confidence in April and a less severe contraction in the nation's manufacturing sector offered bullish investors some reassurances about the outlook for the global economy.
"To me, it all suggests that the stars are starting to align for a global recovery," said Bart Melek, Global Commodity Strategist with BMO Nesbitt Burns in Toronto.
"We certainly look like we are bottoming," he said, adding that the U.S. economy may experience positive growth by as early as the third quarter.
Copper for July delivery on the New York Mercantile Exchange's COMEX division rallied 5.35 cents, or 2.6 percent, to settle at $2.1010 a lb, its highest level on a closing basis since April 20.
"The ISM data that came out was much better than expected, especially the new orders component, strongest since August 2008," said Jesper Dannesboe, senior commodities strategist Societe Generale.
"The manufacturing data gave the market a real boost in the afternoon,." he added.
Copper for three month delivery on the London Metal Exchange (LME) closed up $169 at $4,600 a tonne.
The metal used in power and construction rose about 9 percent in April.
But analysts warned of gains looked fragile as recent support from buying by the Chinese State Reserves Bureau (SRB) would likely subside in coming months.
"Assuming that the SRB buying slows down or dries up, then the fundamentals of oversupply are going to reassert themselves and therefore the copper price is going to weaken," said Charles Kernot, a mining analyst at Evolution Securities.
A surge in canceled warrants has supported copper this year, with the market believing the majority of the material tagged for delivery has been heading for China, the world's biggest copper consumer.
Canceled warrants were 83,100 tonnes from 84,000 tonnes the day before, accounting for about 20 percent of total LME inventories, which fell 7,075 tonnes to 398,700 tonnes.
Stocks have dropped by about 25 percent, or around 140,000 tonnes, since late February.
Copper moved into a contango - a discount on cash over three-month contracts - an atypical move in a bullish market and bucking this week's trend of backwardation.
Spreads on copper widened to a $3 discount on cash over three months contracts as traders cited market tightness easing.
Zinc jumped more than 6 percent and closed at $1,510 a tonne following the U.S. data, from $1,425.
Battery material lead closed at $1,400 from $1,331.
Chinese manufacturing gained further momentum last month, a survey of executives in charge of purchasing in industries across China showed on Friday.
It added to tentative evidence from around the world that the global economy may soon be on the path to recovery.
"The PMI data has helped give a booster from the macro side but more metals specific is the draws in inventory helping to build a more positive underlying picture for the metals," said Gayle Berry, an analyst at Barclays Capital.
Aluminum gained to close at $1,537 a tonne from $1,494 the day before. LME stocks for the metal, used in the autos and packaging industries, jumped 6,075 tonnes to a record 3.79 million tonnes.
Source: Reuters/Maktoob Business
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