A worker checks a shipment of copper inside the plant at the copper refinery of Codelco Ventanas in Ventanas city, about 164 km (101 miles) northwest of Santiago, April 16, 2012.
Credit: Reuters/Eliseo Fernandez
SHANGHAI |
SHANGHAI (Reuters) - London copper rose on Friday, supported by short covering after prices hit the lowest level of the year in the prior session and as investors had priced in disappointing Chinese manufacturing data in the world's biggest consumer of the metal.
Gains were likely to be limited, however, due to concerns over the European debt crisis, which has escalated in recent weeks on the prospect that Greece could exit the euro zone and on worries over Spain's shaky finances.
FUNDAMENTALS
Three-month copper on the London Metal Exchange lifted 0.6 percent to $7,466.75 a metric ton (1.1023 tons) by 9.46 a.m. EDT, after sinking to its lowest level price of $7,403 in 2012 in the prior session.
The most-active September copper contract on the Shanghai Futures Exchange lifted 20 yuan to 54,550 yuan ($8,600) a metric ton after hitting a fresh 2012 low of 54,210 yuan earlier in the session. It fell 1.4 percent on Thursday.
"The markets had lowered its expectations of China's economic performance in May over the past few sessions and had priced in that pessimism along with fears over the euro zone. Short-coverers and some fresh longs have started to come in, but sentiment is still cautious," said CIFCO analyst Zhou Jie.
China's official purchasing managers' index (PMI) fell to 50.4 in May, the weakest reading this year and down from April's 13-month high in the latest sign that output in the world's second-biggest economy is cooling.
The European Central Bank stepped up pressure on Thursday for a joint guarantee for bank deposits across the euro zone, saying Europe needed new tools to fight bank runs as the bloc's debt crisis drives investors to flee risk.
Private payroll growth accelerated only slightly in May and claims for jobless benefits rose last week, suggesting the U.S. labor market recovery was stalling after a strong performance early in the year.
Head of the International Monetary Fund Christine Lagarde denied on Thursday a media report that the Fund was considering contingency plans for a Spanish bailout. The report had caused Wall Street stocks .SPX to sharply cut losses.
The Federal Reserve could resort to more quantitative easing if the U.S. economy deteriorates, but this situation is unlikely as it is on track for a moderate recovery, an official of the U.S. central bank said on Thursday.
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MARKET NEWS
The euro hit a two-year low on Friday and was seen at risk of falling further in coming weeks, dogged by worries that Spain may need external aid to shore up its struggling banking sector and fix its public finances.<USD/>
($1 = 6.3690 Chinese yuan)
(Reporting by Carrie Ho; Editing by Ed Davies)
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