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Copper rallied back above US$10,000 a ton and iron ore broke through US$100 after China’s top leaders stepped up efforts to revive growth.
The price of copper rose more than two per cent to a three-month high on the London Metal Exchange (LME) after the official Xinhua News Agency reported that China’s Politburo will push for the real estate market “to stop declining” and called for “forceful” rate cuts. That followed a Bloomberg report that China is considering a US$142 billion capital injection into the biggest state banks.
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Risk appetite across financial markets received a further boost as the North American trading day got underway with data showing that the U.S. economy bounced back from the pandemic in stronger shape than previously estimated.
Mining stocks also surged. Glencore PLC rallied as much as 5.8 per cent in London and Freeport-McMoran Inc. added 7.5 per cent in New York.
The move by the Politburo followed a raft of Chinese stimulus measures earlier in the week aimed at boosting its lacklustre economy. Some had questioned whether that would be enough to ease deflationary pressures, or lift property and infrastructure consumption, both of which are crucial for metals.
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Policy risks from the United States have also clouded the outlook for base metals, as well as the timing of the recovery in global growth, Citigroup Inc. said in a note. The bank highlighted concerns about further softening of the U.S. labour market, uncertainty heading into the U.S. presidential election, and weakness in manufacturing.
Copper was up 1.7 per cent at US$9,975.50 a ton by 2:28 p.m. local time time on the LME. Zinc climbed three per cent and aluminum rose two per cent. Iron ore advanced four per cent to US$100.30 a ton, after rallying almost eight per cent the previous two sessions.
—With assistance from Mark Burton.
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