Copper in London Gains, Paring Worst Weekly Drop Since June, On Oil Prices

Copper advanced on the London Metal Exchange for the first day in three, paring the steepest weekly loss in nine months, as a drop in oil prices lessened concern that inflationary pressure may curb demand.
The benchmark three-month copper contract increased as much as 0.9 percent to $9,275 a metric ton and traded at $9,240 at 12:13 p.m. Singapore time. The contract for May delivery on the Shanghai Futures Exchange rose 0.7 percent to 69,730 yuan ($10,607) a ton.
Oil headed for a first weekly loss in four weeks, easing concern that sustained high oil prices triggered by unrest in the Middle East and North Africa may slow the economic recovery.
“The fact that oil prices came off a bit may help metals,” Ben Westmore, an analyst at National Australia Bank Ltd., said today by phone from Melbourne. “Copper looks well supported at current prices.”
Both Shanghai and LME copper futures are heading for weekly declines of more than 6 percent, the steepest drops since May and June, respectively. Investors and traders remained concerned about oil prices and a slowdown in copper imports into China, Westmore said. China is the world’s biggest user of copper. Bank AG said.
An oil-price increase of $10 to $110 a barrel will reduce copper consumption growth to 3.5 percent, freeing up about 120,000 tons of metal, according to Deutsche Bank AG analyst Daniel Brebner.
In February, China’s purchases of copper and products tumbled 35 percent from a month earlier to the lowest in more than two years, customs figures showed yesterday.
China’s consumer prices rose 4.9 percent in February from a year earlier, exceeding the government’s 2011 target for a fifth month. The advance was more than the 4.8 percent median forecast in a Bloomberg News survey of 22 economists. The world’s second- largest economy has a 4 percent inflation target for the full year.
Investors are concerned that monetary tightening to tame inflation may slow the Chinese economy as U.S. unemployment remains elevated and debt problems in Europe threaten growth.
“There are now grounds for caution,” Stephen Briggs, a London-based metals analyst at BNP Paribas, wrote in a report. “The geopolitical situation is uncertain and global interest rates are on the rise.”
At a briefing today in Beijing, Chinese central bank governor Zhou Xiaochuan said his monetary policy doesn’t only aim to control inflation, but also needs to target employment and growth.
U.S. applications for first-time unemployment benefits increased by 26,000 to 397,000 in the week ended March 5, Labor Department figures showed yesterday. Economists forecast claims would climb to 376,000, according to the median estimate in a Bloomberg News survey. The total number of people receiving benefits in the prior week fell to the lowest level since October 2008.
Aluminum in London dropped 0.2 percent to $2,582 a ton, zinc rose 0.6 percent to $2,300 a ton and lead climbed 1.2 percent to $2,459.75 a ton. Nickel gained 0.6 percent to $26,200 a ton, while tin added 1.3 percent to $29,800 a ton.
-- With assistance from Sophie Leung in Hong Kong and Agnieszka Troszkiewicz in London. Editors: Matthew Oakley, Jarrett Banks