Copper Gains Most in Seven Weeks as Austerity Concerns Ebb
Source: Bloomberg, Millie Munshi and Anna Stablum (5/18/10)
". . .U.S. housing starts rose last month to the highest level since October 2008"
Only high-deficit countries such as Spain and Portugal will be ordered to make more cuts, policymakers said. Copper was also bolstered by a report showing U.S. housing starts rose last month to the highest level since October 2008.
"People today are starting to feel like all these austerity measures aren't going to crimp demand quite as bad as everyone had thought," said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. The housing numbers also "provided a bounce."
Copper futures for July delivery gained 9.9 cents, or 3.4%, to $3.031 a pound on the Comex in New York, the biggest increase for a most-active contract since March 29.
Housing starts rose to a 672,000 annual rate last month, the U.S. Commerce Department said. Builders are the biggest users of copper, putting about 400 pounds (181 kilograms) into the average U.S. home.
Copper plunged 6.4% yesterday, the biggest drop in 15 months, on mounting speculation that the global economic recovery will slow as Europe struggles to close budget gaps.
"The sharp pullback is likely to encourage buyers back into the market," John Meyer, the head of research at Fairfax IS in London, said in a report. "We expect rallies to be sold into during this period of euro pressure."
Copper for delivery in three months rose 3.5% to $6,695 a metric ton ($3.04 a pound) on the London Metal Exchange.