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Copper jumps as budget fears ease

By Michael Bellart (Global Times)

10:18, December 03, 2012

Chinese commodity futures were mixed last week, though Friday's copper rally helped make base metals among the week's best performers.

The most traded copper contract on the Shanghai Futures Exchange (SHFE) jumped 2.1 percent last week to close Friday at 57,300 yuan ($9,201) per ton. The contract achieved most of that gain Friday, when it added 1.6 percent.

International copper prices hit a six-week high over Thursday night after sentiment improved on hopes that US politicians could hammer out a budget deal before the end of the year, according to the commodity analysts at the Australian bank ANZ.

The benchmark three-month copper contract on the London Metal Exchange (LME) rose 2.7 percent last week to finish Friday at $7,990 per ton.

"News that China would expand refinery copper production capacity next year and speculation that Chinese infrastructure spending could increase supported copper prices further," they said in a research note early Friday.

Other base metals rallied along with copper. The most traded SHFE zinc contract surged 2.7 percent for the week to close at 15,455 yuan per ton. SHFE aluminum grew 1 percent to 15,495 yuan per ton, though the SHFE lead contract shed 0.3 percent to close at 15,305 yuan per ton.

China's official purchasing managers' index (PMI) for November rose for the second straight month, coming in to 50.6 Saturday. The PMI remained above 50, which indicates an expansion in factory output and could have a positive effect on the financial markets.

ANZ analysts said the commodities market will continue to pay close attention to the US budget negotiations this week.

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