Forexpros – Copper futures were sharply higher during European morning hours on Tuesday, boosted amid improved hopes of decisive action by the European Central Bank to ease borrowing costs.
Reports that China was planning fresh economic stimulus for the second half of the year further boosted sentiment on the industrial metal.
On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.418 a pound during European morning trade, jumping 1.4%.
It earlier rose by as much as 1.65% to trade at a session high of USD3.421 a pound.
Market sentiment strengthened after the German member of the ECB’s Executive Board, J?rg Asmussen, indicated that he would support the bond purchasing program proposed by ECB head Mario Draghi, in spite of warnings from Germany’s central bank.
The remarks come a day after the ECB dismissed reports that it may set a cap on peripheral euro zone bond yields, saying it was “absolutely misleading” to report on decisions that have not yet been taken.
Germany’s Bundesbank reiterated its opposition to the ECB’s plan to embark on “unlimited” government bond purchases in its monthly report on Monday.
Investors were looking ahead to a series of euro zone meetings later in the week to discuss measures to ease the debt crisis.
Luxemburg Prime Minister Jean-Claude Juncker, who also heads the group of euro zone finance ministers, was to hold talks with Greek Prime Minister Antonis Samaras on Wednesday, to discuss a two-year extension of the country’s economic reform program.
Copper prices found further support after China’s state-run Xinhua news agency said Beijing was planning fresh economic stimulus for the second half of the year in order to boost domestic consumption.
Xinhua also reported a CNY1.7 trillion stimulus package in the southwestern metropolis of Chongqing aimed at upgrading the cities manufacturing sector.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Market participants were also anticipating the minutes of the Federal Reserve’s August policy meeting later in the week, amid speculation over how close the U.S. central bank may be to implementing another round of stimulus measures.
Upbeat U.S. economic data released last week indicated that the economy may be stabilizing and tempered expectations for another round of quantitative easing by the Fed.
Elsewhere on the Comex, gold for October delivery eased up 0.25% to trade at USD1,624.75 a troy ounce, while silver for September delivery climbed 0.95% to trade at USD28.86 a troy ounce.
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