Copper closes higher in London

Short covering ahead of the weekend lifted London Metal Exchange copper into positive territory Friday after stopping short of breaking important nearby support this week, traders said.

Following a string of sizable LME stock additions and negative U.S. economic data, copper broke support at $7,200 a metric ton Wednesday to fall to a four-week low of $7,090/ton, still within its broad range but close to major support at $7,000/ton.

"There was no follow through after the selloff, and the downside was averted again, leaving me quite bullish for copper," a trader said.

Many analysts tipped copper to succumb to this level soon given improving metal availability, weakness in the U.S. housing sector and slowing demand from China.

September customs data from China revealed a drop in imports, which many market participants said is the result of reduced demand due to the government's attempts to cool the country's economy.

Europe's largest copper producer, Norddeutsche Affiniere AG, said declining Chinese copper imports are much more likely the result of the use of national stockpiles and market participants there waiting for favorable prices before buying.

Upcoming contract negotiations at the world's largest copper producer Codelco in Chile were also moving into view to bolster price outlook.

Spot gold's resilience to a sharp rise in the dollar following U.S. non-farm payroll data also helped LME metals, the trader said. After briefly dipping, spot gold rose to a fresh one-month high of $629.45 a troy ounce.

Fundamentals for LME lead, zinc and nickel remain very bullish, traders said, with zinc poised to continue its "spectacular" performance in the short-term, Societe Generale analyst Stephen Briggs said.

LME zinc rose to $4,300/ton, close to its previous record high of $4,320/tons as LME stock withdrawals continue apace. Stocks were down another 1,600 tons Friday.

Next week was likely to see some large funds roll positions forward with some technical tightness dissipating but funds would "remain active with new money coming in," a trader said.

3 months metal (prices in dollars a ton)
Bid – Ask, Change from Thursday PM kerb

Copper 7325.00-7330.00 Up 85.00
Lead 1680.00-1683.00 Up 15.00
Zinc 4290.00-4295.00 n/a
Aluminium 2787.00-2789.00 Up 32.00
Nickel 31400.00-31425.00 Dn 350.00
Tin 10000.00-10050.00 Dn 50.00