Copper turned positive and hit its highest in more than a month on Wednesday, as the euro rose on media reports the European Central Bank would unveil a new programme of bond purchases, raising hopes of an improvement in the EU debt crisis and boosting appetite for riskier assets.
Three-month copper on the London Metal Exchange was up by 1.1 percent to $7,720 per tonne by 1403 GMT.
The metal earlier rose to a session high of $7,750 a tonne, its highest since July 20, as the euro reversed early losses and rose sharply on reports the ECB would, with broad support from its council members, unveil an unlimited, sterilized programme of bond purchases.
The ECB could start to buy Portuguese bonds quickly after revealing its anti-crisis plan on Thursday. “The markets have been pumped up on the belief that the ECB will announce at its meeting tomorrow that it will restart its bond buying program to address the spike in borrowing cost in some of the weaker euro zone countries,” Societe Generale analyst Robin Bhar said. “But high expectations also means high potential to disappoint. The next big event will be the Fed meeting next week as there are high hopes that Bernanke will put through more stimulus into the economy too.”
Stimulus measures or monetary easing intended to relaunch economic growth would strongly benefit industrial metals demand growth, which has recently slowed down together with industrial activity in most regions.
By Eric Onstad and Silvia Antonioli