Virtual Metals Group

Media/Press

Copper Leads Broad Rally In Futures As German, French Economies Grow

LONDON, 13th August 2009 (Reuters)

Fresh signs of economic growth in Germany and France helped to rally commodities Thursday, but the gains were tempered by a likely bump on the United States' road to recovery.

Investors also cashed out profits in some of the markets that have posted strong gains in recent weeks as analysts cautioned that they could be overvalued.

Industrial metal copper futures surged to the highest level this year in the U.S. and to a 10 1/2-month high in London amid optimism over economic growth.

Oil rose past $71 a barrel before easing. London white sugar futures hit a record high, while raw sugar slipped below Wednesday's 28 1/2-year high hit on tight global supplies. Grains tumbled as profit-taking wiped out early gains.

A day after the Federal Reserve said the economy was showing signs of stabilization after the deepest financial crisis in decades, data showed that Americans shopped less in July and that more signed up for jobless benefits.

Copper rallied on support from the Federal Reserve's assessment of the economy.

"The general trend is up," said Carl Firman, an analyst at Virtual Metals. "There is an increased amount of data in the U.S. and elsewhere that has helped buoy prices across the entire base metal complex."

"Any good news is very good news, and any poor news is discounted," Firman said, adding that any correction in metal prices would likely happen this quarter.

Germany and France, the two largest economies in Europe, posted surprise economic growth in the second quarter of 2009, ending their recessions earlier than many policymakers and economists had expected.

Benchmark copper on the London Metal Exchange soared to $6,450 a metric ton, the highest since early October last year and more than double the levels seen in early April.

September copper on the New York Mercantile Exchange's Comex division rose 9.05 cents, or 3.2%, to $2.9140 per pound.

Oil rose after better-than-expected quarterly earnings from retail giant Wal-Mart reinforced hopes for an economic recovery, but a lower stock market pared the gains.

"There's this global good feeling at the moment. It's reverberating through everything, commodity markets equally as well," said CMC Markets analyst James Hughes.

Crude settled up 36 cents at $70.52 per barrel after peaking at $72.21.

Elsewhere, ICE October raw sugar fell 0.76 cent to 22.21 cents per pound after hitting a session high of 23.32 cents.

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