* U.S. jobs data weak, increases chance Fed will announce QE3
* China approves $157 billion infrastructure spending
* Euro rises on ECB plan to lower borrowing costs for some EU members
* Coming up: China August CPI, industrial output data Sunday
By Chris Kelly and Susan Thomas
NEW YORK/LONDON, Sept 7 Copper rose to a near four-month peak on
Friday, driven by stimulus hopes in the United States, China's approval of a
multibillion dollar infrastructure program and the European Central Bank's plan
to stem the region's three-year-old debt crisis.
Volume was heavy as the late-week surge powered copper through its 200-day
moving average for the first time since May and helped to cap the metal's best
weekly performance since the last week of June. The bullish momentum spread
across the broader base metal complex, with aluminum, zinc and
lead also hitting multimonth highs.
Gains were fueled on investor bets of a healthier year-end demand outlook
from top consumer China and another round of bond buybacks, known as
quantitative easing, from the U.S. Federal Reserve, perhaps as early as next
"They are reacting to the potential for QE3 in the United States and the
National Development and Reform Commission's (NDRC) investments," said Patricia
Mohr, vice president, economics and commodity market specialist at Scotiabank.
China's powerful economic planning body, The NDRC, announced approvals for
60 infrastructure projects worth more than $150 billion, a move expected to
energize an economy mired in its worst slowdown in three years.
Given its heavy usage in construction and electrical wiring and China's near
40-percent intake of the world's copper consumption, prices of the red metal
soared on the news.
COMEX copper for December delivery shot up 12.85 cents, or 3.65
percent, to settle at $3.6450 per lb, its highest level on a closing basis since
Trading ranged from $3.5045 to $3.6525.
COMEX volume jumped to 75,000 lots in late New York business, nearly 70
percent above the 30-day norm, according to preliminary Thomson Reuters data.
At the London Metal Exchange (LME), three-month copper peaked at the
psychologically important $8,000 a tonne, its highest since mid-May, before
ending the day at $7,990 versus a last bid of $7,700 on Thursday.
Dour news from the U.S. labor market showing nonfarm payrolls increased by
only 96,000 last month against an expected 125,000 also gave investors reason to
cheer as it set the stage for the Fed to pump additional money into the sluggish
economy next week.
The news came after the European Central Bank on Thursday announced a
potentially unlimited bond buying plan, which is expected to lower the borrowing
costs of indebted countries like Spain and Italy and ease fears over the future
of the euro.
"Prices are rising in anticipation of a potential policy response to a weak
situation. There is nothing fundamentally to warrant the rise in prices,
absolutely nothing. If stimulus doesn't come or doesn't work, then these markets
are rising on air," said Macquarie analyst Duncan Hobbs.
Additional support came from the currency market, where the euro climbed to
a near-four-month high against the dollar on the prospects of more bond buying
in the euro zone and the United States.
The stronger euro makes copper and other commodities priced in dollars more
affordable for European and other non-U.S. investors.
"This (ECB) plan averts disaster, for now, rather than any long-term
sustainable strategy. But that's fine, that's all that's really required at the
moment," said Marex macro strategist Guy Wolf. "If China and the U.S. are
supportive for copper, Europe only matters to the extent that is it going to
implode or not."
In other metals, three-month tin was last bid at $19,950 per tonne
from $19,725 at the close on Thursday. The metal has fallen around 24 percent
Refined tin shipments from Indonesia dropped 32 percent in August from the
previous month, a trade ministry official said on Friday, as the current low
prices for the metal continued to limit supplies from the world's top exporter.
Three-month zinc ended at $1,970 per tonne, its highest in nearly
four months and up more than 3 percent from Thursday's close of $1,940.
Sister-metal lead ended up $44 at $2,092, having also hit a near
four-month high of $2,100.
Aluminum was last bid at $2,022 a tonne from $1,975, having hit its
highest in more than three months at $2,034.
Metal Prices at 1741 GMT
Metal Last Change Pct Move End 2011 Ytd Pct
COMEX Cu 364.60 12.95 +3.68 343.60 6.11
LME Alum 2022.00 47.00 +2.38 2020.00 0.10
LME Cu 7970.00 230.00 +2.97 7600.00 4.87
LME Lead 2095.00 47.00 +2.29 2035.00 2.95
LME Nickel 16500.00 440.00 +2.74 18710.00 -11.81
LME Tin 19950.00 225.00 +1.14 19200.00 3.91
LME Zinc 1970.00 62.00 +3.25 1845.00 6.78
SHFE Alu 15625.00 5.00 +0.03 15845.00 -1.39
SHFE Cu* 56670.00 360.00 +0.64 55360.00 2.37
SHFE Zin 15020.00 75.00 +0.50 14795.00 1.52
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07