US rate hopes lift copper to 10 day high

Print this page Posted on : 11-30-2007 by recycleinme.com

Copper touched its highest level in 10 days on Thursday, on the back of renewed expectations of a rate cut from the US Federal Reserve, a move which would soothe worries about easing demand for metals.

Copper for three-months delivery on the London Metal Exchange rose to $6,925 per tonne its highest since November 19 and was at $6890/6,910 per tonne by 1056 GMT, up 2.6 per cent or $175 from Wednesday’s close.

“The recognition of the fact hat Fed could cut rates aggressively-which would encourage economic growth going forward – is supporting prices,” said metals analyst, Mr. Dan Smith, at Standard Chartered.

The Federal Reserve’s Vice-Chairman, Mr. Donald Kohn, on Wednesday signaled a willingness to cut interest rates further, saying renewed financial market turmoil could slow the US economy more abruptly than earlier thought.

Mr. Kohn’s openness to more rate cuts brings Fed thinking more into line with the expectations of financial markets, which widely anticipate a rate reduction in December and are leaning toward more cuts next year.

Zinc was up $55 at $2,540/2,550 on the back of short covering, traders said. Key ingredient of stainless steel, nickel, was at $28,250, up $150 from Thursday. Three-months lead was at $3,100/3,120, up $65 from Wednesday while aluminium traded $11 higher at $2,521/2,524 and tin was $50 firmer at $16,850/17,050.

Source : Business Line