Copper bounces off lows

SINGAPORE - London copper rose one per cent, trading above $US9,500, after dipping to its lowest in nearly a month in the previous session, and pressure remained on base metals from the economic threat posed by surging oil prices.

Three-month copper on the London Metal Exchange rose $US90.75 to $US9,515.75 a tonne by 1319 AEDT, after having touched $US9,365, a near one-month low, in the previous session.

Shanghai's most active May copper contract rose 0.4 per cent to 71,970 yuan.

"Metals have decoupled from energy in recent days and the market is obviously worried about the inflationary impact of oil prices," analyst at MF Global in New York Edward Meir said.

"Energy prices are going higher with daily news of falling exports from Libya, but something has to give - either Gaddafi will be overthrown, which seems likely or the Saudis will pump more oil. Either way we should see a dip in oil and rallies in metals."

US crude oil futures rose more than $US1, on mounting fears that unrest in Libya could spread to other oil producers in the Middle East and North Africa, while Brent touched a two-and-a-half year high of $US113 a barrel.

The turmoil in Libya continued, as thousands of Libyans celebrated the liberation of the east of the country from the rule of Muammar Gaddafi, who has vowed to crush the revolt.

Disruption stemming from the revolt in Libya has cut more than a quarter of output from the world's 12 largest exporter.

At least 400,000 barrels per day of the country's 1.6 million output is shut, according to Reuters calculations.

The US dollar index edged down to a three-week low on Thursday, as the safe-haven demand triggered by the crisis in Libya drove investors to the Swiss franc while the greenback appeared to lose its lustre.

In other metals, LME aluminium rose $US2 to $US2,532, and prices in Shanghai were little changed.

"These are pivotal times for markets. I am very worried about what higher energy and food prices will mean for disposable incomes from China to America," a trader in Singapore said.

"If we see sustained, higher prices for oil and other staples, it has the potential to severely limit the demand growth that the rally in copper especially was built upon."

Technically, copper's recovery may be limited with a rebound capped below $US9,567, according to Reutersanalyst Wang Tao.

He said a Fibonacci retracement analysis on the fall from $US9,892.74 to $US9,365 reveals the rebound may end around the 38.2 per cent level.

(Source: http://www.businessspectator.com.au/bs.nsf/Article/METALS-Copper-bounces-off-lows-oil-driven-econ-fea-ED6MV?opendocument&src=rss&WELCOME=AUTHENTICATED%20REMEMBER)