Farallon Resources Ltd. (fka FRLIF)

[the cork]

Zinc rises, Copper in London Gains for Third Week on Stocks Advance, European Outlook
By Bloomberg News - Aug 6, 2010 1:40 AM PT

Copper gained, heading for a third weekly increase, as a rise in equities and speculation that European economies are recovering boosted the demand outlook.

Three-month copper on the London Metal Exchange advanced 0.5 percent to $7,438 a metric ton at 4:05 p.m. in Shanghai, up 2.1 percent this week. The metal touched $7,527 on Aug. 4, the highest level since April 27.

“We’ve been witnessing a close correlation between equities and metals recently,” Cao Yanghui, an analyst at Nanhua Futures Co., said from Hangzhou. Copper in Shanghai advanced after local stocks climbed in the afternoon, boosting the metal in London, he said.

China’s benchmark stock index closed 1.4 percent higher. Most Asian stocks rose, driving the MSCI Asia Pacific Index to a fifth weekly increase, as gains by real-estate companies overshadowed declines among exporters following an increase in U.S. jobless claims. Economists expect reports today to show German industrial production grew for a fourth month and British manufacturing expanded.

U.S. jobless claims unexpectedly rose to a three-month high in the week ended July 31, Labor Department figures showed yesterday.

Demand Worries

“The global macroeconomic picture hasn’t been great, so it’s been speculative money that caused the recent rally and the high prices have slowed physical purchases in China,” Ji Xianglong, an analyst at Xinhua Futures Co., said from Zhejiang.

Backwardation, where near-term prices are higher than longer-dated contracts, has narrowed or disappeared in the past two weeks in the Chinese market, suggesting ample supplies or lower demand in the short-term.

Immediate-delivery copper in Changjiang, Shanghai’s biggest cash market, traded about 175 yuan more than the most-active futures contract yesterday, compared with this year’s high of 1,410 yuan on July 1. November-delivery futures on the Shanghai Futures Exchange closed 0.8 percent higher at 57,830 yuan ($8,544) a ton.

“Fundamentally, there’s little to keep copper prices above $7,500 in London and 60,000 yuan in Shanghai,” said Ji.

Codelco, the largest copper producer, said demand in China will slow “a little” in this half because of government measures to tighten lending and curb inflation.

“The Chinese are worried about controlling inflation, and they want to have a GDP growth target at 9 percent, not 11 percent,” said Chief Executive Officer Diego Hernandez in an interview in Shanghai today.

Still, Codelco is optimistic about the copper market because new supplies will be crimped as mining companies are reluctant to take on debt for expansion plans, Hernandez said.

Aluminum in London increased 0.3 percent to $2,216 a ton, zinc rose 1.2 percent to $2,123 a ton, and lead advanced 0.8 percent to $2,203 a ton. Nickel gained 1 percent to $22,210 a ton, while tin climbed 0.4 percent at $20,550 a ton.

http://www.bloomberg.com/news/2010-08-06/copper-drops-for-second-day-on-outlook-concerns-pares-third-weekly-gain.html