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Copper rises as weak China factory data spurs stimulus bets

Published 05/21/2015, 03:21 AM
Updated 05/21/2015, 03:21 AM
© Reuters.  Copper rises as weak China factory data spurs stimulus bets

© Reuters. Copper rises as weak China factory data spurs stimulus bets

Investing.com - Copper prices rebounded from the previous session's three-week low on Thursday, as weak China factory activity reinforced views that Beijing will roll out fresh stimulus measures for the world's second-largest economy.

On the Comex division of the New York Mercantile Exchange, copper for July delivery tacked on 1.9 cents, or 0.66%, to trade at $2.848 a pound during European morning hours. Prices held in a range between $2.828 and $2.852.

A day earlier, copper fell to $2.820, the weakest level since April 30, before closing at $2.829, down 0.8 cents, or 0.3%. Futures were likely to find support at $2.820, the low from May 20, and resistance at $2.913, the high from May 19.

Data released earlier showed that China's HSBC Flash Manufacturing Purchasing Managers' Index inched up to 49.1 this month from 48.9 in April, missing expectations for an increase to 49.3 and below the 50-point level that separates growth in activity from contraction.

The disappointing data added to speculation policymakers will have to introduce further easing measures to jumpstart the economy amid lackluster growth.

Since November, the People's Bank of China has introduced a series of stimulus measures, including lowering interest rates three times and cutting the reserve requirement ratios of major banks twice, in order to spur economic activity and boost growth.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Elsewhere, gold futures for June delivery tacked on $2.00, or 0.17%, to trade at $1,210.70 a troy ounce, while silver futures for July delivery rose 8.7 cents, or 0.51% to trade at $17.20 an ounce.

Gold remained supported after the minutes from the Federal Reserve’s April meeting published Wednesday showed that most officials believed a June rate hike would be premature, after recent data showed that the economy grew just 0.1% in the first quarter.

Most policymakers also believe economic growth will rebound after the slow start to the year and that the labor market will strengthen.

According to the minutes, the timing of a rate hike "would depend on the evolution of economic conditions and the outlook".

Later in the day, the U.S. was to release a string of reports including initial jobless claims, existing home sales and a look at manufacturing activity in the Philadelphia region.

Investors were also turning their attention to Friday’s U.S. inflation data and a speech by Fed Chair Janet Yellen for fresh indications on how the economy is performing.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.3% at 95.37, holding below Wednesday’s highs of 95.94.

Meanwhile, concerns over the prospects of a Greek default continued to dominate market sentiment ahead of a critical June 5 deadline for Athens to reach a deal with its creditors.

Greece is scrambling to reach an agreement with its international lenders over economic reforms they say must be implemented before the final €7.2 billion tranche of the country's €240 billion bailout is released.

The debt-strapped nation is due to make a €305 million payment to the International Monetary Fund on June 5, but will default if a deal is not reached by then.

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