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DJ BASE METALS: Copper 3.6176 Climbs on Expectations of China Stimulus
Sep 10, 2012 By Tatyana Shumsky

--Comex December copper up 1.3% at $3.6910/lb
--Weaker industrial production data from China fans hopes of stimulus
--Investor expectations of QE3 gather momentum as Fed meeting draws near

NEW YORK--Copper futures marched higher Monday as weaker economic data from China bolstered investor expectations that the world's largest copper consumer will institute new measures to support growth.

The most actively traded contract, for December delivery, was recently up 4.60 cents, or 1.3%, at $3.6910 a pound on the Comex division of the New York Mercantile Exchange.

China reported that its industrial production rose 8.9% in August from a year earlier, a slowdown from July's 9.2% on-year increase, and the slowest growth since May 2009. The value added industrial output figure was also less than the 9% increase predicted by economists polled ahead of the release.

"The economic data on China released over the weekend appears to have already heightened assumptions that the authorities will be forced to take action," said Walter de Wet, head of commodity strategy with Standard Bank, in a note to clients.

Copper prices rallied as investors wagered that measures to boost growth in China will lift demand. Copper is widely used in general manufacturing, electronics, electrical goods, automotive production and construction, and demand for the metal tends to rise as the economy expands.

Meanwhile, China's consumer price index rose 2% from a year earlier in August, up from July's 1.8% rise and in line with expectations.

The rise in inflation may constrain the government's ability to help the economy, said Edward Meir, senior commodity analyst with INTL FCStone, in a note to clients.

Copper traders are also looking ahead to Thursday, amid broad market anticipation that the Federal Reserve will announce a third bond purchasing program aimed at boost growth in the U.S. A spate of weaker U.S. economic data, including Friday's anemic employment report, have stoked expectations that the central bank will step in and act to support the economy.

"The easing argument will likely dominate sentiment over the short-term," said INTL FCStone's Mr. Meir.

Write to Tatyana Shumsky at [e-mail]

(END) Dow Jones Newswires
09-10-12 0943ET
Copyright (c) 2012 Dow Jones & Company, Inc.

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