By Melanie Burton
MELBOURNE, Jan 8 (Reuters) - London copper rose on Tuesday
as the euro was supported by expectations the European Central
Bank will refrain from a rate cut this week, and on hopes
Chinese trade data will show a recovery is gathering steam in
the world's top metal consumer.
U.S. economic developments have also been dictating
short-term direction, given the quiet start to the calendar
year. Copper hit its highest in more than two months last week
after U.S. lawmakers struck a deal to avoid going over the
so-called fiscal cliff of devastating tax increases and spending
But minutes from the latest Fed meeting signalled it may
rein in easing measures sooner than expected, somewhat souring
'Most of what we've seen so far in January has been
reactions to specific events in the U.S.,' said metals analyst
Ivan Szpakowski at Credit Suisse in Singapore.
'Now metals are steadying. It may be there is a sense that
they have been oversold in the short term,' he said, adding that
the euro's gains have also provided added support.
Three-month copper on the London Metal Exchange had
climbed 0.24 percent to $8,090.50 a tonne by 0150 GMT, reversing
small losses in the previous session.
Prices, which hit their highest since Oct. 18 at $8,256.50
on Jan. 3, have since dropped back, but are still up 2 percent
for the year.
The ECB will keep interest rates unchanged at its meeting on
Thursday, economists forecast in a Reuters poll.
The euro was steady against the dollar, buying
$1.3124, holding well above its three-week low of $1.2998
touched on trading platform EBS on Friday.
A weaker U.S. dollar makes commodities denominated in the
greenback more attractive to holders of other currencies.
The most-traded April copper contract on the Shanghai
Futures Exchange rose 0.21 percent to 58,340 yuan
($9,400) a tonne.
China's annual economic growth may have quickened to 7.8
percent in the fourth quarter a Reuters poll showed, snapping
seven straight quarters of weaker expansion while its export
growth probably rebounded from three-month lows in December.
China is the world's biggest copper consumer, accounting for
40 percent of refined demand.
The trade data, which includes initial estimates for metals
imports and exports, is due on Thursday.
INDEX REBALANCING BEGINS
The annual S&P GSCI and DJUBS commodity
indices began their annual rebalancing process this week, which
will result in erratic trade with selling pressure seen in
aluminium and zinc, brokers said.
'We would expect the nearby spreads to be offered for the
next few days as the index rolls start up... and for aluminium
and zinc to underperform as the Dow Jones/UBS Commodity Index
rebalance sees selling interest hitting on the close for the
next few days,' said RBC Capital in a note.
According to Morgan Stanley research, a net decline in the
Dow Jones-UBS aluminium weighting to 4.9 percent from 5.9
percent should result in sales of 14,621 lots of aluminium, just
under 3 percent of total futures contracts open interest.
A decline in zinc weighting to 2.5 percent from 3.4 percent
in the index should result in sales of 14,144 lots, more than 8
percent of total open interest.
Base metals prices at 0150 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8090.50 19.50 +0.24 2.04
SHFE CU FUT APR3 58340 120 +0.21 1.14
HG COPPER MAR3 368.25 0.45 +0.12 0.82
LME Alum 2070.00 5.00 +0.24 -0.05
SHFE AL FUT MAR3 15265 00 +0.00 -0.52
LME Zinc 2033.75 12.75 +0.63 -1.44
SHFE ZN FUT APR3 15470 -75 -0.48 -0.48
LME Nickel 17400.00 190.00 +1.10 1.43
LME Lead 2312.00 7.00 +0.30 -1.20
SHFE PB FUT 15150.00 -20.00 -0.13 -0.66
LME Tin 24050.00 0.00 +0.00 2.78
LME/Shanghai arb^ 744
Shanghai and COMEX contracts show most active months
($1 = 6.2296 Chinese yuan)
(Reporting by Melanie Burton; Editing by Joseph Radford and
((firstname.lastname@example.org)(+65 6870 3017)(Reuters
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