Copper rose to a five-week high Thursday on optimism that U.S. lawmakers will reach a budget accord, while signs increased that metal demand will rise in China.
Three out of four global investors expect U.S. officials to reach a short-term agreement to avert more than $600 billion in spending cuts and tax increases set begin on Jan. 1. Copper shortfalls will extend into the first half as an accelerating Chinese economy more than doubles the pace of growth in global consumption.
“China is showing signs of improvement, and people are feeling more confident that politicians in U.S. will be able to resolve the crisis,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview.
Copper futures for March delivery jumped 1.9 percent to settle at $3.6055 a pound at 1:11 p.m. on the Comex in New York. Earlier, the price reached $3.622, the highest for a most-active contract since Oct. 23.
The metal pared gains of as much as 2.4 percent after House Speaker Boehner, an Ohio Republican, said that “no substantive progress” had been made in budget talks. He also said he remains “hopeful” on negotiations.
In the third quarter, the economy in the U.S. expanded more than previously estimated, and fewer Americans filed first-time claims for unemployment insurance payments last week, government reports showed Thursday. Last week, a Chinese manufacturing index signaled the first expansion in 13 months.
China is the world’s biggest copper consumer, followed by the U.S.
“I am optimistic about global demand going forward and think the market is set to gradually rally,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview.
On the London Metal Exchange, copper for delivery in three months increased 1.7 percent to $7,899.50 a metric ton ($3.58 a pound). Aluminum jumped 3.2 percent to $2,064 a ton, the biggest gain since Sept. 14. Zinc, lead, nickel and tin also advanced.
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