Copper at 3-Month High


"China says its economy will avoid a sharp slowdown."

Copper rose to its highest level since early May on Wednesday after assurances from top metals consumer China that its economy would avoid a sharp slowdown. Benchmark copper for three-month delivery on the London Metal Exchange closed at $7,165 a ton, up from $7,059 at the close on Tuesday. It hit a session high at $7,213, its highest since May 4.

"There's some seasonal weakness coming through, but generally I don't think there are any great worries about China," said Robin Bhar, an analyst at Credit Agricole. He said copper prices may weaken a little from here, however. "As we go through the next few months we should see demand coming off a bit, if anything a retracement back to the $6,800 level."

Prices dipped briefly on Wednesday after U.S. data showed new orders for durable manufactured goods unexpectedly fell for a second straight month in June, posting their largest decline since August.

China's central bank said on Tuesday that Chinese economic growth would slow but that there would be no double dip.

This followed well-received comments last week from Premier Wen Jiabao, who said China would keep working to boost consumption.

Often seen as an indicator of economic activity, China's benchmark Shanghai Composite Index rose more than 2% to a two-month closing high.

Investors had become concerned in recent months about Chinese policies aimed at preventing its economy from overheating as well as European sovereign debt and a possible double-dip global downturn.

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