Reuters reported that London copper rallied to its highest in six weeks as promising manufacturing data from top consumer China fuelled a cautious return in investors' appetite for the metal although worries over US fiscal woes kept a lid on gains.
The pace of activity in China's vast manufacturing sector quickened for the first time in 13 months in November, a survey of private factory managers found adding to evidence that the economy is reviving after seven quarters of slowing growth.
Mr Bonnie Liu analyst of Macquarie said that "China's economic data is improving into quarter four. That is supporting prices I don't see much pressure on the downside before the end of the year."
Three month copper on the London Metal Exchange climbed 0.20% to USD 8,010.00 per tonne by 0308 GMT. Copper prices hit USD 8,045 per tonne earlier, the highest since October 19th 2012 and are expected to extend an advance on chart based buying after prices last week broke above the 200 day moving average around USD 7,905. Prices have rallied almost 7% from a more than 2 month low hit in November.
Also boosting metals, the euro rose to 6 week high against the dollar, after China's manufacturing data helped to trigger stop loss buying of the common currency. A softer dollar spurs buying of commodities priced in the greenback by making them cheaper for holders of other currencies.
The most traded March copper contract on the Shanghai Futures Exchange climbed 0.45% to CNY 57,560 per tonne. But continued uncertainty over the US fiscal cliff USD 600 billion in government spending reductions and expiring tax cuts set to kick in at the start of next year that threatens to tip the economy back into recession weighed on investor sentiment.
Macquarie's Liu said she expects a resolution to the US fiscal cliff before Christmas which would shake off some uncertainty clouding demand prospects for the metal into 2013.
Credit Suisse said that this week's focus will again be on economic data considering today's release of the US and European manufacturing PMIs and the US labor report on Friday. Should the data confirm the recent pick up in economic momentum we think commodity prices should recover further.
US manufacturing data Monday and a November labour report are expected to show some impact from superstorm Sandy.