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Domestic commodity prices stabilize as headwinds from EU subside

By Michael Bellart (Global Times)

08:28, May 23, 2012

Domestic base metal futures steadied along with other commodities following Monday's rally as a lack of bad news out of Europe and optimism that the Chinese government would step up efforts to boost the economy propped up prices Tuesday.

The most active copper contract on the Shanghai Futures Exchange (SHFE), for September delivery, slipped 0.07 percent to close at 55,850 yuan ($8,835.16) per ton. The contract opened 0.32 percent above Monday's closing price, before tapering off over the session.

Overnight, the three-month copper contract on the London Metal Exchange (LME) rose 0.74 percent from its level when the Chinese mainland markets closed Monday. The contract was trading up another 0.4 percent at $7,785.80 per ton when trading ended yesterday.

LME copper got some support from a rally in the US stock markets overnight, which bled over into the commodities market, said Jia Zheng, a base metals analyst for Shanghai East Asia Futures.

"There wasn't any big foreign or domestic news today, so prices were relatively flat," she told the Global Times. "Yesterday evening, the US stock markets had a big increase, driving up shares in China. Commodities prices followed the stock market, rising higher."

Analysts said the market remained buoyed by Premier Wen Jiaobao's statement over the weekend that the government should make maintaining growth more of a priority.

Along those lines, China Securities Journal reported yesterday that the government would step up approval for infrastructure projects to offset slowing growth. The upcoming meeting of EU leaders later today also calmed the commodities markets as some traders and investors waited to see whether there might be some progress toward a solution to the Continent's sovereign debt crisis, analysts said.

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