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Copper Rises as Fed Rate Cut Eases Demand Concern, Zinc Gains |
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Copper rose in Shanghai after a U.S. interest rate cut eased concerns that credit problems will slow economic growth and hurt demand for industrial metals.
The U.S. Federal Reserve, in an unscheduled announcement on Aug. 17, cut its discount rate by 0.5 percentage point to 5.75 percent and said it's prepared to take further actions to ``mitigate'' damage to the economy from the rout in global credit markets. The U.S. is the second-largest copper user, after China.
The rate cut ``may help restore confidence in the metals market'', Xue Feng, chief analyst at Maike Futures Co., said in Shanghai today.
Copper for October delivery on the Shanghai Futures Exchange rose as much as 1,280 yuan, or 2.1 percent, to 62,880 yuan ($8,279) a ton and traded at 62,810 yuan at the midday break. Copper for immediate delivery in Changjiang, Shanghai's biggest cash market, rose as much as 1.4 percent to 63,000 yuan a ton.
Copper for delivery in three months gained 0.7 percent to $7,062 a ton on the London Metal Exchange at 12:25 p.m. Shanghai time, after closing 4 percent higher on Aug. 17.
The Fed's move to cut the discount rate -- what it charges banks for direct loans -- gave the metals market ``a strong boost,'' said David Thurtell, an analyst at BNP Paribas, in an e- mailed report Aug, 17.
Copper had dropped 10.8 percent in the three days prior to the Fed's cut as investors sold metals and other commodities to cover losses on equities slump, triggered by U.S. subprime mortgage defaults.
Shares Advance
The Morgan Stanley Capital International Asia Pacific Index, a regional equity benchmark, advanced 4.1 percent to 142.76 as of 12:28 p.m. in Shanghai, after slumping 8 percent last week.
BHP Billiton Ltd., the world's biggest mining company, said an accident that closed a copper smelter at its Olympic Dam mine in Australia isn't expected to cut production.
Mexico's miners' union said a court allowed it to continue a strike at copper producer Grupo Mexico SAB's San Martin mine in the central state of Zacatecas.
The union began its walkout at the three mines on July 30 to demand better safety and a new labor contract.
Zinc in Shanghai for October delivery rose 2.9 percent to 26,880 yuan a ton at midday, while November delivery aluminum gained 1 percent to 19,160 yuan.
Zinc for delivery in three months on the London Metal Exchange advanced 2.3 percent to $3,140 a ton at 12:27 p.m. Shanghai time, aluminum was up 0.9 percent at $2,516.25 a ton, tin gained 0.9 percent to $13,625 a ton and nickel jumped 3.1 percent to $26,800 a ton.
Among other LME-traded metals, lead was untraded in Asia after settling at $2,890 on Aug. 17. back to the News |
