Looks like lake Ferguson's economics just got a little meattier....
By Daniel Magnowski
LONDON (Reuters) - Industrial metals rose as much as 3 percent on Tuesday after a four-day weekend, lifted by rises on stock markets as some confidence returned to the economy, analysts said.
Copper for delivery in three months on the London Metal Exchange, often seen as a key gauge of real economic activity, was up 2.3 percent from Thursday's closing price to a quoted $8,020/8,040 per tonne at 1049 GMT, tracking European equity bourses which were up around 3 percent.
"There is a direct link between stock markets and metal prices," Commerzbank analyst Eugen Weinberg said.
Investors said they hoped that an interest rate cut by the U.S. Federal Reserve last week would mitigate the damage done to the economy by the global credit crunch.
"An increase in overall economic activity is positive for commodity markets. Also, last week's price falls were overdone," Weinberg said.
Copper fell 10 percent last week as part of a commodity-wide sell-off. It raced to a new record high in early March which took its gain for the year to more than 30 percent, making it one of the strongest performers on financial markets.
"The re-opening of markets today has seen a pretty solid recovery take place as risk appetite has improved on the back of slightly more positive sentiment and the overnight rally in U.S. stock markets," UBS analyst Robin Bhar said in a report.
"Aluminium and copper remain our favoured two metals to trade from the long side and we recommend going long into the dips,"; he said.
China imported an average 4,698 tonnes of copper a day in February, up 14 percent from January and above the 2007 average of 4,082 tonnes, according to customs data released on Monday.
Copper consumption in the world's largest user of the metal rose 0.7 percent in January and February from the previous year, according to Reuters calculations, shrugging off bad weather and a weaker U.S. economy.
Executives at some of the world's biggest producers said prices would remain strong, citing demand from China.
Prices retreated from the record high of $8,820 seen early this month, but copper could revisit those levels as demand picks up in the traditionally strong second quarter.
"We are used to cycles (in prices). I don't think this fall implies a permanent decline, it's within the volatility copper has experienced in this scenario of high prices," BHP Billiton Base Metals Division President Diego Hernandez said.
Spot gold also gained, supported by a waning dollar -- at $1.5578 against the euro -- heading back towards a record low of $1.5905 against the single currency hit last week.
LME aluminium rose 2.4 percent to $2,910/2,915 per tonne and zinc was up 3.1 percent at $2,340/2,360 per tonne.
Lead was up $26 at 2740/2760 per tonne, tin was up $125 at $20,000/20,200 per tonne, and steel-making raw material nickel was up $750 at $29,250/29,450 per tonne.
