SINGAPORE: Shanghai copper rose 2.8 percent yesterday and London metal extended gains, after the latest batch of positive US data, this time existing home sales, helped soothe jangled investor nerves.
Pending sales of previously owned US homes edged up as expected in December, a survey showed, allaying some fears of renewed weakness in the troubled sector. That came on the heels of a string of positive GDP and manufacturing numbers since Friday.
"The numbers are good, but we need a little more consistency. The pattern has been for a string of positive numbers followed by one or two poorer indicators," a dealer in Hong Kong said.
"We are holding our breath now ahead of the payrolls report at the end of the week. There is a sense that payrolls may finally reverse their long decline. But if we see another big drop the budding confidence the market is feeling will shatter."
The median forecast for nonfarm payrolls is for an increase of 5,000 after an unexpected 85,000 drop in December. A rise would be only the second increase since December 2007.
Three-month copper on the London Metal Exchange rose $75 to $6,895 a ton by 0715 GMT, recovering after it hit $6,600 on Monday, its lowest since mid-November, having tumbled as much as 15 percent in the previous three weeks.
"We finally got the much talked of pre-Lunar New Year sell-off, but the Chinese are still not buying much because they will be shut for a week," said Nirrav Sharma of G-Steelmet, a Singapore-based trading house.
"In reality, we are seeing an adjustment - some funds are exiting, creating opportunities for others to get in. People are calling for the market to trade between $6,700 to $7,000 for a while."
Benchmark third-month Shanghai copper rose 1,540 yuan by the close to 55,820 yuan.
Southern Copper Corp, one of the world's largest copper producers, said it sees average copper prices at $3.25 per pound ($7,165 a ton) in 2010, as it expects emerging and developed economies to boost demand for the metal.
"We believe that inventories of copper will start to die off during the year, reversing the last month's trend," Southern Copper's Chief Financial Officer Genaro Guerrero said on a conference call with investors.