London copper rose near a one month high early after lenders secured an aid deal for Greece boosting the euro and building on confidence about global demand for the metal sparked by signs of an economic revival in top consumer China.
Prices however pared gains alongside the euro which fell back from a one month high. Euro zone finance ministers and the International Monetary Fund clinched agreement on reducing Greece's debt on Monday in a breakthrough to release urgently needed loans to keep the near bankrupt economy afloat.
In a significant new pledge, ministers committed themselves to take further steps to lower Greece's debt to significantly below 110% in 2022.
Mr Dominic Schnider head of commodity research at UBS Wealth Management said that "That's absolutely the right step. A resolution to the uncertainties overshadowing Greece and the US economy by year end should steady global growth prospects and set the stage for gains in metals prices next year. China is stabilizing. We expect an uptick in growth momentum from the second quarter. Across commodities, base metals have the best outlook on a 6 month to 12 month time horizon."
Three month copper on the London Metal Exchange eased 0.25% to USD 7,779.75 per tonne by 0116 GMT. It had ended little changed in the previous session. Copper hit its highest since November 2 at USD 7,821.50 earlier in the session and is up more than 2% for the year. The most traded March copper contract on the Shanghai Futures Exchange was little changed at CNY 56,200 per tonne.
The Greece deal offered explicit recognition so far that some write off of loans may be necessary from 2016, the point when Greece is forecast to reach a primary budget surplus, adding to risk appetite across broader markets.
Mr Jean Claude Juncker chairman of Eurogroup said that ministers would formally approve the release of major aid on December 13th 2012. This helped boost the euro to 1 month high against the dollar before gains ebbed. A weaker dollar makes commodities prices in the greenback cheaper for holders of other currencies. For now, concerns about the US fiscal cliff continued to cap metals prices.
Republicans in the US Congress on Monday called on President Mr Barack Obama to detail long-term spending cuts to help solve the country's fiscal crisis while holding firm against the income tax rate increases for the wealthy that Democrats seek.
US durable goods figures are due later in the session while China's official purchasing manufacturer's index is scheduled for release at the weekend.
