Copper at Records in London, New York on China Easing, Recovery

Dec. 30 （Bloomberg） -- Copper surged to records in London and New York on speculation the global recovery is gaining pace and as investor concerns about tightening in China eased after manufacturing growth in the world’s largest metals user slowed.

Three-month copper on the London Metal Exchange rose as much as 1.6 percent to $9,550 a metric ton, surpassing the previous peak of $9,447 reached yesterday. It traded at $9,522 a ton by 3:33 p.m. Singapore time, up 29 percent this year, and poised for a second annual increase. The metal rose to the highest level in almost 3-1/2 years in Shanghai.

A report showed today that manufacturing growth in China, the world’s largest metals user, slowed for the first time in five months in December, easing concerns about excessive tightening of monetary policy after the government raised borrowing costs on Christmas Day for the second time this year. Consumer prices will stay at “tolerable” levels, according to investor Mark Mobius.

“The manufacturing data today may at first be seen as bearish, however given the biggest risk to the market has always been a slowdown in China due to tightening measures, investors are taking it as a bullish signal instead,” Wang Pengzhen, an analyst at Zhongda Futures Co., said from Zhejiang. “The data gave investors optimism that the government may ease up on its tightening policy.”

March-delivery futures on the Comex in New York gained as much as 1.6 percent to $4.3790 a pound, the highest ever for a most-active contract, before trading at $4.3670, up 30 percent this year. The metal for March-delivery on the Shanghai Futures Exchange added as much as 1.9 percent to 70,850 yuan （$10,723） a ton, the highest price since July 2007, reversing an earlier loss of as much as 1 percent.

Yuan, Equities

China’s yuan gained to its strongest level since the end of 1993 on speculation the central bank will permit more appreciation next year to help curb inflation. The People’s Bank of China today set the reference rate at the strongest level since ending a dollar peg in July 2005. China’s stocks rebounded on speculation the appreciating yuan will boost earnings.

“Copper is in a strong, upward trend, and perhaps a strong yuan today is giving a further boost to copper prices,” Lin Hui, head of the research department at Orient Securities Futures Co., said by phone from Shanghai.

Jiangxi Copper Co., the nation’s biggest maker of the metal, gained the most in two weeks.

Economists are expecting data today to show U.S. initial jobless claims fell and Italian business confidence rose to the highest in more than two years. A South Korean report showed industrial production expanded for a 17th consecutive month, adding to signs that Asian economies are picking up.

Aluminum in London rose 0.4 percent to $2,463.50 a ton, zinc increased 0.7 percent to $2,416 a ton, and lead climbed 0.4 percent to $2,541 a ton. Nickel gained 1.3 percent to $24,147 a ton, while tin added 0.9 percent to $26,800 a ton.

--With assistance from Helen Sun in Shanghai. Editors: Richard Dobson, Matthew Oakley.