Copper Rises Most in Four Weeks as Japan Plans to Buy European-Aid Bonds

Bloomberg Jan 11--Copper futures rose the most in four weeks after Japan said it will buy bonds issued by Europe’s financial-aid funds, helping to ease concern that the debt crisis will worsen in nations including Ireland.

Japan is joining China, the world’s biggest copper user, in aiding Europe after escalating sovereign debt led to bailouts of Ireland and Greece. Concern that the crisis might derail economies, harming usage of commodities, weighed on copper in 2010’s second quarter. European and U.S. equities climbed today.

“Japan’s decision to buy euro-area bonds is likely to have little impact on underlying commodity-market fundamentals, but it appears to have supported broader risk appetite,” said Daniel Major, an analyst at RBS Global Banking & Markets in London.

Copper futures for March delivery rose 8.45 cents, or 2 percent, to settle at $4.349 a pound at 1:17 p.m. on the Comex in New York. That was the biggest gain for a most-active contract since Dec. 13. On the London Metal Exchange, copper for delivery in three months climbed $189, or 2 percent, to $9,510 a metric ton （$4.31 a pound）. All six of the main metals traded on the LME gained, led by a 3.5 percent advance for nickel.

Japan will use its foreign-exchange reserves to buy more than a fifth of bonds to be issued this month by the European Financial Stability Facility, Finance Minister Yoshihiko Noda said.

Price Outlook

Copper will average $9,200 a ton this year, 22 percent higher than in 2010, Standard Bank Plc said in a report yesterday. It predicted an average price next year of $10,000.

“Copper has not yet got into five figures, but this landmark cannot be far away,” Leon Westgate, an analyst at the bank in London, said in the report. “Ongoing economic recovery will underpin robust demand, which, combined with supply shortfalls in many markets, will create a tight fundamental backdrop. Meanwhile, liquidity remains high and investor demand for commodities is going from strength to strength.”

Copper consumption will outpace supply by 385,000 tons this year, with the gap widening to 562,000 tons in 2012, according to Standard Bank. It also projected supply shortfalls for lead and tin.