Reuters reported that copper edged higher after three straight sessions of losses buoyed by Chinese Premier Mr Wen Jiabao's support for the euro zone, which helped boost investor confidence in the global economy and the outlook for metals demand.
After meeting Ms Angela Merkel German Chancellor, Mr Wen said that he was confident the euro zone could pull out of its debt crisis. China was willing to buy more EU government bonds if it could assess the risks involved, the strongest sign of support for its biggest trading partner in recent months.
A Shanghai based trader with an international firm said that "Copper prices started turning around after the meeting between Wen and Merkel. Investors feel reassured."
Traders said that Mr Wen's comments helped offset some of the bearishness which pervaded the market after China's top planning agency said the economy was slowly stabilizing, dashing hopes for more aggressive stimulus measures by the government.
But major gains are unlikely as investors are waiting for Friday's speech by Federal Reserve Chairman Mr Ben Bernanke who is expected to provide hints of a third round of quantitative easing at the Jackson Hole, Wyoming, meeting of central banks.
Three month copper on the London Metal Exchange was up 0.7% at USD 7,630 per tonne by 0818 GMT, snapping three sessions of losses. The most active December copper contract on the Shanghai Futures Exchange climbed 0.9% to CNY 55,680 per tonne, on track to reverse 2 sessions of losses.
Copper has fallen as hopes for rate cuts or a reduction to bank reserve requirements in China fade as Beijing seems reluctant to resort to blunt monetary policy instruments and is instead experimenting with more delicate tools, such as injecting liquidity into the interbank market. Physical demand for copper also slackened in China, the world's top consumer of the refined metal.
State backed research firm Minmetal Futures said that the premium for China's spot copper price over the prompt September month contract narrowed to CNY 45 on Wednesday. Premiums were at around CNY 100 last week.
Traders said that the narrowing spread is a sign that the recent spurt of spot purchases by smelters and speculators has failed to prop up the market amid poor demand from copper end users.
Source - Reuters
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