Copper steadied on Monday, with economic sentiment supported by the U.S. Federal Reserve chairman saying more quantitative easing was possible, but a weak euro and worries about debt problems in Europe kept optimism in check.
Supporting the outlook for the U.S. economy, Federal Reserve Chairman Ben Bernanke said the central bank could end up buying more than the $600-billion (U.S.) in U.S. government bonds it has committed to purchase if the economy fails to respond or unemployment stays too high.
Three-month copper on the London Metal Exchange traded at $8,725 a tonne at 1123 GMT, from Friday's last quote of $8,725/8,730 a tonne, and traded within reach of its record high of $8,966 reached on Nov. 11.
"The backdrop still remains quite positive," said Charles Kernot, an analyst at Evolution Securities, citing a recent bout of upbeat economic data.
"(And) with Bernanke again saying that if there are any further problems in the United States he is going to push forwards with further quantitative easing," he added.
But worries about the potential spread of debt problems in the euro zone still put pressure the market.
The euro fell versus the dollar, as the U.S. currency rose against a broad currency basket, as peripheral debt concerns dominated ahead of a euro zone finance ministers' meeting. A stronger dollar deters non-U.S. investors.
"There are still all the issues as far as the euro zone is concerned," Mr. Kernot said.
EYES ON STOCKPILES
Market attention was on LME stockpiles, where data since mid-November has shown one party holding between 50 and 80 per cent of the inventory. British newspaper The Telegraph reported the buyer of the material was JP Morgan.
This position was part of the reason for a recent spike in the premium for cash metal over the three-month contract, which last stood at around $46.5 a tonne.
The premium has fallen more than a quarter since Dec. 1, when it hit $63.5 a tonne, its highest in just over two years.
Also supporting sentiment, stocks of copper at LME warehouses have declined steadily since February, indicating a pick-up in demand and stoking concerns about tightness in the market.
Stocks last fell 1,250 tonnes to 352,375 tonnes.
Technical indicators suggested copper prices could rally above $9,000 a tonne in the next 48 hours, with the market ending a consolidation phase, Reuters technical analyst Wang Tao said.
Copper scored its biggest weekly gain in four months last week, shrugging off data that showed U.S. employment increased far less than expected in November and the jobless rate jumped to a seven-month high of 9.8 per cent.
Aluminium traded at $2,308.50 a tonne from Friday's last quote of $2,319/2,320.
Zinc was at $2,220.75 from Friday's close of $2,219.5 a tonne and battery material lead was at $2,339.25 from a last quote of $2,338/2,340 a tonne.
Tin traded unchanged at $25,550 a tonne and nickel was at $23,275 a tonne from $23,500 a tonne.
"The euro zone debt crisis clearly serves as one issue that threatens a more global downturn in risk-taking," Standard Bank said in a note.
"But we do not believe that the world is in a place where the sort of meltdown that we saw during the credit crunch is just around the corner," it said.Report Typo/Error
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