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Copper futures edge up from 2-week low on China stimulus hopes

Published 09/27/2012, 06:17 AM
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Investing.com - Copper futures edged up from the previous session’s two-week low on Thursday, as appetite for riskier assets improved after China’s central bank injected a record amount of capital into money markets.

Gains were limited as markets continued to focus on developments in the euro zone amid sustained concerns over the handling of the debt crisis in Spain and in Greece.

On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.732 a pound during European morning trade, gaining 0.6%.

Earlier in the day, prices rose by as much as 1.6% to trade at a session high of USD3.7401 a pound. Copper futures fell to a two-week low of USD3.681 on Wednesday.

Market sentiment firmed up on the back of reports of a surprise liquidity move by China’s central bank.

The People’s Bank of China reportedly injected a record CNY365 billion, or USD58 billion, this week into the Chinese banking system, easing liquidity conditions ahead of the end of the current quarter and before the Golden Week holidays next week.

The move fuelled speculation policymakers in Beijing will do more to stimulate economic activity in the world’s largest copper consumer.

Some market players adjusted positions ahead of the week-long holiday that will shut markets in mainland China next week.

But investors were jittery as Spain remained reluctant to request a bailout and trigger the European Central Bank's new bond-buying program. Yields on Spain's benchmark 10-year government bond topped 6% for the first time in three weeks on concerns the country will run into problems financing itself.

Later in the day, Madrid was to present its draft budget for next year and announce structural reforms, while the results of bank stress tests are due on Friday.

Demonstrators clashed with police on the streets of Madrid and Athens on Wednesday, in an upsurge of popular anger at new austerity measures being imposed on two of the euro zone's most vulnerable economies.

Elsewhere on the Comex, gold for December delivery added 0.3% to trade at USD1,758.45 a troy ounce, while silver for December delivery rose 0.45% to trade at USD34.09 a troy ounce.

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