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COPPER HITS $3.78
Oct 01, 2012 (Dow Jones Commodities News via Comtex) --

--Comex December copper recently trades up 2.65 cents, or 0.7%, at $3.7845 a pound

--Retreat in U.S. dollar, upbeat U.S. manufacturing report send copper higher

--Weak China manufacturing data has limited impact; markets there closed for holiday

By Matt Day
NEW YORK--Copper futures gained Monday, as a retreat in the U.S. Dollar and upbeat U.S. manufacturing data outweighed the latest sign of economic struggle in the world's top metals consumer.

The most actively traded copper contract, for December delivery, recently traded up 2.65 cents, or 0.7% at $3.7845 a pound on the Comex division of the New York Mercantile Exchange. Futures rose as high as $3.798 a pound, the highest intraday price in more than one week.

Manufacturing activity in the U.S. returned to growth in September, according to a report released Monday by the Institute for Supply Management. Copper is used in a wide range of industrial applications, and such data are widely seen as indicators of likely demand for the metal.

ISM's U.S. manufacturing index stood at 51.5 in September, up from 49.6 in August. Readings above 50 indicate expansion.

Copper's gains also came as the euro advanced against the U.S. dollar. Better than expected euro-zone economic data, as well as the continued pressure from the Federal Reserve's latest round of bond buying, weighed on the U.S. currency. That gave a boost to dollar-denominated copper by making the futures appear cheaper for buyers using other currencies.

The currency tailwind helped copper erase losses seen overnight after the news that China's official gauge of manufacturing activity showed the sector contracted for a second consecutive month in September. The purchasing managers' index stood at 49.8 in September, from 49.2 in August. HSBC's separate reading showed a similar trend. Its index for September showed 47.9, compared with 47.6 in August.

Worries about the health of top consumer China have kept pressure on copper prices this year. The slower pace of growth has left traders watching for hints that Beijing would take steps to prop up economic activity. The country taken some steps to free up cash for lending, and approved some infrastructure projects.

"There is little good news from China at present," analysts with Commerzbank said in a note, adding that the PMI released Monday "again proved a disappointment."

Chinese markets were closed Monday for the start of a week-long holiday. That, analysts say, could limit copper trading.

-Write to Matt Day at [e-mail]

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