copper rides up on fed hopes

Copper rides up on Fed hopes, tin hits new record
Tue Aug 7, 2007 5:13 PM BST
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By Pratima Desai

LONDON, Aug 7 (Reuters) - Copper prices rose on Tuesday alongside equities as markets speculated that the U.S. Federal Reserve could act to reassure investors with an interest rate cut sooner rather than later, while tin hit a new record high.

Metals shrugged off the weakness in U.S. stocks, which fell on worries about the economy's health and tracked gains in European shares.


Stronger sentiment helped boost shares of London-listed miners such as BHP Billiton (BLT.L: Quote, Profile , Research), Vedanta Resources (VED.L: Quote, Profile , Research) and Anglo American (AAL.L: Quote, Profile , Research), which were all up between 2-4.5 percent.

Copper for delivery in three months on the London Metal Exchange was up at $7,745 a tonne versus $7,680 on Monday, when the metal used in the power and construction industries dipped to a five-week low of $7,585.

"There are signs that liquidity and credit conditions are improving," Michael Jansen, analyst at JP Morgan, said.

"Equities are trading higher, while credit conditions are improved ahead of the (Fed's) statement."

Analysts said there had been some squaring of short copper positions -- bets on lower prices -- ahead of the U.S. Federal Reserve's decision on interest rates and a statement on economic growth prospects later on Tuesday.

"Expect the U.S. Federal Reserve to play down the impact of the sub-prime crisis," BNP Paribas said in a research note.

Traders said the market is also waiting to see whether Mexico will rule that a strike by worker at Latin American copper major Grupo Mexico is legal. [ID:nN06417930]