Copper posted its biggest three-day gain since July Thursday, ending firm as strong U.S. data boosted economic and demand prospects and easing European debt pressure spurred currency-led fund buying.
Widespread expectations for an undersupplied market have contributed to the red metal's bullish tone in recent weeks, keeping prices at the front end of the curve elevated at a two-year premium even as a deal looked set to end the longest strike at a major private Chilean copper deposit.
London Metal Exchange (LME) three-month copper closed up $135 at $8,720 (U.S.) a tonne, within reach of its record $8,966 per tonne hit last month.
Other metals in the complex followed suit, with lead and zinc gaining about 5 per cent.
COMEX copper for March delivery climbed 3.15 cents to settle at $3.9790 per lb, near the upper end of its $3.9315 to $3.9970 range.
"We've had some good data out over the last couple of days," David Wilson, an analyst at Societe Generale, said. "There seems to be firmer ground for more optimism globally."
Data Thursday showed U.S. retailers reported higher-than-forecast sales for November, while the four-week moving average for initial weekly claims for jobless benefits fell to a two-year low.
An unexpected rise in pending U.S. home sales added to the optimistic tone, offering evidence of greater stabilization in a sector at the heart of 2008's economic downturn.
The data came on the heels of better-than-expected U.S. private-sector employment figures and expansion in global manufacturing Wednesday.
Aside from the macroeconomic optimism, Michael Gross, futures analyst with Optionsellers.com in Tampa, Florida, believed the story of the day was negative dollar reversal.
"It's just emboldening copper bulls," he said.
"You're seeing a lot of fresh buying coming in here from bulls on the sidelines waiting to see what the dollar was going to do.
"If the dollar continues to correct here, we could easily see new highs here before the end of the year," he said.
The euro rose against a broadly falling dollar, after reports surfaced that the European Central Bank was buying euro zone bonds after its president Jean-Claude Trichet disappointed investors by not announcing an aggressive bond-buying program.
A weaker dollar makes base metals cheaper for non-U.S. investors.
Surprisingly strong emerging-market demand growth and a mounting production deficit are expected to push copper prices next year to new record highs.
That tighter supply/demand outlook has helped pushed the premium for cash copper over the three-month contract to around $60 a tonne -- its widest backwardation since October 2008.
Rumblings of imminent physically backed exchange-traded products in base metals have dominated the market, fueling speculation that a dominant position controlling 50 to 80 per cent of cash warrants for copper could be behind such a launch.
Bolstering this outlook, LME copper stocks have fallen steadily since February, last down 2,425 tonnes at 352,425 tonnes -- their lowest since October 2009.
"Supply problems will play a major role not only in the short term but in the mid-term as well," Commerzbank analyst Daniel Briesemann said.
In Chile, union leaders and management at the Collahuasi copper mine prepared to reach an agreement to end a month-long strike at the world's No.3 deposit.
Aluminum ended up $15 at $2,355 a tonne and lead jumped $144 to $2,374, having hit a more than two-week high at $2,385.
Zinc closed up $100 at $2,260 and nickel firmed $200 to $23,700.
Tin went untraded in rings but was last quoted at $25,500/25,575 from $24,700.
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