Reuters reported that London copper hit a one week high on hopes that central banks around the world will step in to fuel economic growth after concerns about the US jobs sector and gloomy China factory data.
A contraction in China's factory sector activity intensified in August as output and new orders dropped, while manufacturers cut prices to compete for business, a survey showed on Monday.
The HSBC Purchasing Managers' Index fell to a seasonally adjusted 47.6, the lowest level since March 2009. The reading was little changed from a flash or preliminary estimate of 47.8 and was lower than 49.3 in July.
The data, the latest evidence of the slowdown in the world's second largest economy, precedes a September 7th 2012 report on US jobs growth that many investors believe is key to any decision on launching another bout of stimulus measures, especially after US Federal Reserve Chairman Mr Ben Bernanke expressed concern about employment levels in the country.
Mr Bernanke on Friday left the door wide open to a further easing of monetary policy saying the stagnation in the US labour market was a grave concern but he stopped short of providing a clear signal of imminent action.
Mr Nick Trevethan senior metals strategist at ANZ bank in Singapore said that the market is still looking to the major central banks around the world to step up to the plate and support policy and growth. The market is a bit disillusioned by China's policy inaction. We think China has to do something fairly drastic, maybe 50, or even 100 basis point cut in the reserve requirement ratio because its repo action doesn't seem to have been especially effective."
The People's Bank of China has been using short term reverse repos since May to adjust liquidity in the market's main money rate, the 7 day repo rate, in more nuanced moves to support its economy than RRR or direct interest rate cuts.
Three month copper on the London Metal Exchange had ticked up 0.45% to USD 7,648 per tonne by 0712 GMT. It earlier hit USD 7,679 per tonne, the highest since Aug. 24. Copper closed August up 0.6 percent and has edged into positive territory for the year but is still down about 13% from the year's peak hit in February.
The most active December copper contract on the Shanghai Futures Exchange climbed 1.37% to CNY 56,180 per tonne. This week, investors will be focusing on a pivotal European Central Bank policy meeting on Thursday in which chief Mr Mario Draghi is expected to announce concrete steps to cut borrowing costs for indebted euro zone nations.
Source - Reuters
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