Copper bounces from weekly low as dollar falls

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LONDON – Copper bounced from a one-week low on yesterday, reversing earlier losses as the euro hit a two-month high versus the dollar and US stocks rose, but concerns about demand in top consumer China capped gains.
Benchmark copper for three-month delivery on the London Metal Exchange ended the day at $6 685 a tonne, versus $6 630 at the close on Monday and compared with a session low at $6 560, the weakest since July 7.
“Copper’s purely following the currency,” said Randy North, RBC Capital Markets trader, referring to the euro moving to a session high versus the dollar. A weaker dollar makes industrial metals cheaper for non-US investors.
The euro rose to a fresh two-month high yesterday as stocks rallied on strong US corporate earnings reports and a solid Greek debt auction eased some concern about Europe’s debt crisis.
“But we need to see the euro clearly up above $1,27 before we’re going to get a break on the upside for copper. It’s been stuck in a range since June,” North said, adding that the upper-end of that range was at around $6 900 a tonne.
North said imports data from China, the world’s top consumer of copper, were still strong but some in the market have read it as bearish, which weighed on copper earlier yesterday.
On Monday, China reported a drop in copper imports for the third straight month in June.
“The Chinese import numbers for metal weren’t quite as good as some people had hoped,” Daniel Smith, analyst at Standard Chartered said. “People were also looking for a bit of rebound
in the (Chinese) property market and the government might ease back in some of its restrictions — so that hope has faded.”
Growth and debt worries in the euro zone continue to dampen market sentiment. Moody’s also downgraded the sovereign debt rating of euro zone member Portugal by two notches. —Reuters