London Copper Was Steady Near 2 Month Highs

Reuters reports that London copper was steady near 2 month highs as signs of a revival in China's economic growth and hopes of further easing by the United States underpinned prices while wrangling over the US fiscal cliff weighed on sentiment.

Prices have staged a year end rally, rising almost seven percent in the past month, on evidence of China's renewed growth momentum in November and signs of US manufacturing recovery. Copper is a China and US story.

Mr Henry Liu head of commodity research at Mirae Asset Securities in Hong Kong said that “Right now China is in recovery and the US is in recovery. It's still a weak recovery but we don't think the price will drop, so any good news from the liquidity side or the macro side will help the price go higher. No doubt about it, the liquidity from the U.S. Fed is a good driver for prices.”

Three month copper on the London Metal Exchange traded at USD 8,112.75 per tonne by 0709 GMT up 0.12% from the previous session when it logged small losses. Copper prices are up more than 6% this year and stay within reach of almost 2 month highs at USD 8,159 hit on Monday. The most traded March copper contract on the Shanghai Futures Exchange rose 0.14% to close at CNY 57,980 per tonne.

The dollar remained broadly under pressure on Wednesday as markets geared up for more Fed stimulus, underpinning metals. Dollar priced commodities are cheaper for holders of other currencies when the greenback is weaker. The US Federal Reserve is expected to announce a new round of Treasury securities purchases at its policy meeting that concludes later in the day.

Markets have generally priced in a fix to negotiations to avert the fiscal cliff of USD 600 billion worth of tax cuts and spending increases that expire early next year and threaten to tip the world's second biggest economy into recession. But until a deal is reached, traders expect a ceiling to remain over prices.

Talks intensified on Tuesday as President Mr Barack Obama and US House of Representatives Speaker Mr John Boehner spoke by telephone after exchanging new proposals but a spokesman said Boehner did not view them as acceptable. Sentiment also firmed in the wake of stronger economic sentiment in Germany spurred by encouraging US economic data, entering positive territory for the first time since May.

European stock futures pointed to a fractionally higher open on Wednesday, on expectations for the US Federal Reserve to announce more stimulus to support the economy and on hints of progress in US budget talks.