Isra-Mart srl: Comex Copper Continues Rebound On EU Debt Hopes

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Copper futures pushed higher Monday as a pledge by leaders of Germany and France to present a set of plans to stem the euro zone's debt crisis lured buyers to risky assets.

Copper for December delivery, the most actively traded contract, was recently up 4.9 cents, or 1.5%, at $3.3225 a pound on the Comex division of the New York Mercantile Exchange.

Commodities and equities markets received a boost Monday as German Chancellor Angela Merkel and French President Nicolas Sarkozy told reporters over the weekend that they would present a "comprehensive package" of crisis-fighting measures by the end of the month. The plans would include measures to recapitalize cash-strapped euro-zone banks when necessary, they said, as well as proposals to increase coordination of budget policies among euro-zone nations.

The copper market came under intense selling pressure in mid-September as worries that European financial institutions were slipping toward a credit crisis caused traders to dump growth-sensitive assets. The declines also came amid fears that slowing global manufacturing activity meant demand for industrial metals would slip.

Copper is particularly sensitive to the growth outlook because of its widespread uses in construction and manufacturing.

Cautious optimism about Europe's financial situation last week spurred a rebound in copper, as investors who had bet prices would fall closed out those positions.

Speculative traders had turned increasingly bearish on the prospects for copper prices recently, Commodity Futures Trading Commission data show. Money managers boosted their net short position in Comex copper futures and options by 50% during the week ended Tuesday, according to the CFTC. Such traders as a group have held bearish positions in copper for five of the last seven weeks.

Copper has been supported for much of the last year by the view that mine supply will fall short of global demand. Labor strikes in South America and Southeast Asia have increased the likelihood that mines will struggle to increase output, but those factors have largely been disregarded by investors more concerned that a global recession may be looming.

With constraints to world copper supply expected to continue, "market sentiment is thus worse than market conditions," analysts with Commerzbank said Monday in a note.

Traders are closely watching Chinese market activity this week as traders return from a national holiday there last week.

Analysts with Barclays Capital said in a note Monday that "the mood of Chinese copper buyers remain cautious despite the price rally in the latter half of last week," with buyers there awaiting clarity on the latest plans to tackle Europe's debt crisis.