Forexpros – Copper futures rallied for the fourth consecutive day on Thursday, trading at the highest level since mid-September after a capital injection by the Chinese central bank into money markets fuelled speculation of further easing measures by the world’s top copper consumer.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.806 a pound during European morning trade, rallying 1.43%.
It earlier rose by as much as 1.75% to trade at USD3.821 a pound, the highest since September 20.
Copper prices have rallied nearly 10.1% since the beginning of 2012, buoyed by expectations that demand from top consumer China will remain strong and that the global economy was recovering despite the effects of the euro zone’s debt crisis.
Copper is sensitive to the economic growth outlook because of its widespread uses across industries.
Earlier in the day, the People’s Bank of China offered CNY183 billion, or USD29 billion, of 14-day reverse repurchase agreements, easing liquidity conditions ahead of the Lunar New Year holiday.
Separately, reports surfaced that China’s banking regulator was considering a plan to relax capital requirements for lenders.
Chinese policy makers are under pressure to loosen monetary policy after growth in the world’s second-biggest economy moderated to the slowest pace in 10 quarters. The central bank in December cut lenders’ reserve requirements for the first time since 2008.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Meanwhile, traders continued to eye developments surrounding the euro zone’s ongoing sovereign debt crisis. Greece’s government was due to resume talks with its bond holders later in the day to discuss a voluntary write-down on Greece’s sovereign debt.
Greece needs to secure an agreement on restructuring its debt in order to secure new bailout funds and avert a default when a EUR14.4 billion bond redemption comes due on March 20.
Markets were also eyeing government debt sales from France and Spain later in the day, in what was being viewed as a critical test of investor’s appetite for European sovereign debt.
Elsewhere on the Comex, gold for February delivery rose 0.28% to trade at USD1,664.45 a troy ounce, while silver for March delivery climbed 0.5% to trade at USD30.69 a troy ounce.
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