LONDON Copper surged 1 percent to a one-month peak on Thursday, buoyed by a strong euro and fresh hopes that U.S., Chinese and European officials will unleash more stimulus measures to revive their economies, boosting demand for metals.
Three-month copper on the London Metal Exchange ended up 1.05 percent at $7,684.50 a tonne, off an intraday peak of $7,720, which was the highest since July 20.
In New York, COMEX copper for September delivery jumped as much as 1.7 percent midmorning to a fresh one-month high of $1.512 per lb after piercing a 100-day moving average midmorning. It settled 1.1 percent higher at $3.4925 per lb and was on track for its largest weekly gain since mid-July.
The euro hit a seven-week high versus the dollar, driven by talk that Spain was negotiating with the euro zone over conditions for international aid, and by speculation the European Central Bank was considering targeting yield levels with its bond purchases. <FRX/>
Hopes of intervention by the central bank and the European rescue fund, the EFSF, helped to offset data that showed the euro zone was headed for another recession, with the Purchasing Managers' Index survey from Markit notching up a seventh month of contraction and underscoring the need for central bank action.
Also helping the euro were signals from Wednesday's minutes of the last U.S. Federal Reserve meeting that another dose of stimulus could come fairly soon. That was followed overnight by downbeat manufacturing data in China, feeding hopes for more easing in the world's top raw materials consumer.
In the United States, data was weak. The number of Americans filing new claims for jobless benefits unexpectedly rose last week, manufacturing improved only slightly in August and new single-family home sales rose in July but prices fell.
"It's difficult to be really bullish given the macro-economic background, but all that news is in the price and there's every likelihood of a fresh stimulus package in the U.S., plus we're coming into the seasonally strong period for metals demand," Sucden trader Steve Hardcastle said.
"On top of that, we've got bad U.S. figures today and a weaker dollar, which also helps the price," he added.
Copper, which is down 12 percent from a peak of $8,765 in February, has broken out of a range of $7,300 to $7,600, which trapped it for several weeks. It must challenge $7,800 to spark further momentum, analyst Wiktor Bielski at VTB Capital said.
Capping gains in copper slightly, a U.S. official said on Thursday the minutes of the Fed meeting were "a bit stale" and that data since then had been somewhat stronger.
In China, data showed factory activity in August shrank at the fastest pace in nine months as new export orders slumped and inventories rose, a signal that a persistent slowdown in economic growth has extended deeper into the third quarter.
"China's flash manufacturing PMI has dropped to its lowest level this year. So far today the impact on commodity prices has been trumped by hopes of further quantitative easing from the U.S. Fed. However, we doubt that additional global policy stimulus will be sufficient to prevent prices from falling as final demand remains weak and inventories high," said Ross Strachan, an analyst at Capital Economics.
Near-dated tin prices have climbed on worries about a supply shortfall after Indonesian producers said this month they would halt exports because of low prices.
Cash tin on the LME was evaluated at a $9 premium to three-month prices on Wednesday, compared with a premium of $1.50 on Tuesday.
"With spec players still short, recent production closures and a large warrant holder ... we think tin could still run higher in the short term. The next big resistance point in the charts for tin is the 100-day moving average at $19,786," RBC Capital said in a note.
LME data on Thursday showed one party held 40 to 50 percent of tin warrants, down from 50 to 80 percent in data released on Wednesday.
Three-month tin hit the highest levels in nearly 2-1/2 months at $20,069 a tonne. It closed at $19,950 a tonne, up 2.3 percent from Wednesday's close.
In other metals, aluminum ended up 1.57 percent at $1,904.50 a tonne, while zinc closed up 1.47 percent at $1,862. Lead ended at $1,952, up 1.77 percent, after touching the highest levels in over three weeks at $1,953.75, and nickel closed up 2.5 percent at $16,475.
(Additional reporting by Josephine Mason in New York and Melanie Burton in Singapore; Editing by Alison Birrane, Jane Baird and David Gregorio)
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