DJ BASE METALS: Copper 3.4585 - U.S., China Stimul

DJ BASE METALS: Copper 3.4585 - U.S., China Stimulus Bets Boost Comex Copper
Aug 23, 2012 By Matt Day

--Comex September copper settles up 3.8 cents, or 1.1%, at $3.4925 a pound
--Federal Reserve minutes, China manufacturing data stoke easing hopes
--Chinese copper demand seen weak now, but traders bet on stimulus rebound, restocking

NEW YORK--Copper futures gained for a third consecutive session Thursday, settling at a one-month high on the view that the U.S. and Chinese central banks would ease monetary policy in an effort to prop up economic growth.

Copper for September delivery, the most-actively traded contract, rose 3.8 cents, or 1.1%, to settle at $3.4925 a pound on the Comex division of the New York Mercantile Exchange, the highest settlement price since July 19.

Copper prices had gained along with other metals after the close of regular trading on Wednesday, as minutes from the Fed's meeting earlier this month signaled growing support among the central bank's policy makers for action to prop up the U.S. economy.

The copper market is sensitive to such moves because the metal is used in a wide range of applications in construction and industry. Action by the Fed could support activity in copper-heavy industries and may also weaken the U.S. dollar, providing a boost to dollar-denominated commodities such as copper by making them appear cheaper for buyers using other currencies.

Futures extended their gains after weak manufacturing data from China, copper's top consumer, fueled expectations that easing could be in the cards there, too. HSBC's gauge of nationwide manufacturing in China fell to a nine-month low, data released on Thursday showed.

Traders appear "to have viewed this as meaning the Chinese will embark on further easing measures of its own," Standard Bank analyst Leon Westgate said in a note.

The copper market has moved in recent months largely based on the latest speculation on how much support Beijing will provide to the country's economy. China accounts for about 40% of world copper consumption, and slowing growth there has pressured copper prices for much of this year.

Demand for copper there is "generally weak" now, analysts with Citigroup said this week in a note, though it could rebound without stimulus from Beijing should metals manufacturers run down their inventories and be forced to return to the market.

"Markets are looking past today's environment," said Bart Melek, head of commodity strategy with TD Securities, "and are looking six months down the road."

Copper settlements (ranges include electronic and pit trading):
Sep $3.4925; up 3.80 cents; Range $3.4625-$3.5120
Dec $3.4985; up 3.80 cents; Range $3.4680-$3.5170

--Tatyana Shumsky contributed to this article.
Write to Matt Day at matt.day@dowjones.com.

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08-23-12 1403ET

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