Copper hits 11-week high on upbeat China data; U.S. debt woes cap gains

Shutterstock photo - Copper futures rose to the highest level since mid-October during European morning hours on Thursday, as encouraging Chinese economic data added to hopes of improving demand from the world's largest copper consumer.

Gains were limited as investors' focus turned to how U.S. lawmakers will deal with the upcoming debt ceiling debate.

On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.752 a pound during European morning trade, up 0.4% on the day.

New York-traded copper prices rose by as much as 0.5% earlier in the session to hit a daily high of USD3.759 a pound, the strongest level since October 18.

Official data released earlier showed that China's services Purchasing Managers' Index expanded for the third consecutive month in December.

The services PMI rose to 56.1 last month from 55.6 in November, according to the National Bureau of Statistics.

China is the world's largest copper consumer, accounting for almost 40% of world consumption last year.

But gains were limited as concerns over further budgetary battles facing the U.S. came into focus.

U.S. lawmakers passed a compromise bill to avoid the fiscal cliff earlier in the week, blocking a series of looming tax increases and spending cuts that could have pushed the U.S. economy back into a recession.

However, investors remained jittery over the longer term U.S. fiscal outlook, with negotiations on raising the U.S. debt ceiling still to come in February.

Echoing the growing nervousness over the debt ceiling debate, a spokesman from the International Monetary Fund warned that "more remains to be done" to lower the U.S. debt load.

Meanwhile, rating agency Moody's said Wednesday that avoiding the fiscal cliff was only the first in a number of steps needed to ensure that the U.S. kept its coveted triple-A rating.

Standard & Poor's, which downgraded the U.S. to AA+ from AAA in August 2011, said the deal had done little to alter the country's negative credit outlook.

Market players now looked ahead to Friday's highly-anticipated data on U.S. nonfarm payrolls, as investors attempt to gauge the strength of the country's economic recovery.

Copper is sensitive to the economic outlook because of its widespread uses in construction and manufacturing.

Elsewhere on the Comex, gold for February delivery shed 0.25% to trade at USD1,684.25 a troy ounce, while silver for March delivery eased down 0.1% to trade at USD30.97 a troy ounce. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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