Copper rises on global recovery, QE outlook caps gains

Copper surged on Friday and pared weekly losses following upbeat economic data from the U.S. to Europe and China on Thursday and Friday. Speculations that the Federal Reserve will taper its bond purchasing program by the end of the year kept gains limited.

On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at $3.349 per pound at 9:56 GMT, marking a 0.56% advance. Prices held in range between days high and low of $3.354 and $3.316 per pound respectively. The industrial metal rose 1% on Thursday following upbeat China, U.S. and Euro zone manufacturing data and trimmed its weekly decline to 0.4% following Fridays gains.

Copper was well supported recently as upbeat economic data from U.S. to China indicated stabilizing activity in the worlds top economies, thus boosting demand prospects for the widely used in the industrial sector red metal.

On Friday, Germanys final second quarter GDP met expectations for a 0.7% surge, compared to the preceding quarter, which also had risen by 0.7%. The leading EU nations economy expanded by 0.5% year-on-year in the second quarter, matching anticipations and the preceding periods 0.5% growth.

Meanwhile, Great Britains Q2 Preliminary Gross Domestic Product surpassed projections both on quarterly and annual basis. Quarter-on-quarter, Great Britains economy grew by 0.7%, 0.1% above expectations and the preceding three months advance. On an annual basis, United Kingdoms GDP rose by 1.5%, 0.1% above projections and the previous periods 1.4% advance.

On Thursday, the Chinese HSBC Manufacturing PMI, prepared by HSBC Holdings Plc and Markit Economics, surged to a four-month high of 50.1, signalling expansion that was based on a rebound in new orders. The figure outperformed analysts’ expectations for a surge to 48.3 from July’s final reading of 47.7, an 11-month low. The indicator added to promising reports for July’s factory output, retail sales and exports, providing positive signs that the world’s second biggest economy is stabilizing. Levels above 50 indicate expansion in the respective sector. Flash figures are released approximately six business days prior to the end of the month. The final reading, as well as the government statistics, will be released on September 1.

In Europe, France’s Advance Manufacturing PMI failed to meet analysts’ projections for a rise to 50.2 and remained flat at 49.7. However, Germany’s manufacturing sector offset France’s downbeat data. The leading EU nation’s Advance Manufacturing PMI for August surged to 52.0, surpassing expectations for an advance to 51.1 from July’s reading of 50.7. Meanwhile, the Euro zone’s flash manufacturing PMI also exceeded projections and rose to 51.3, compared to 50.3 in July and an expected increase to 50.7.

Also on Thursday, the U.S. manufacturing activity expanded to a five-month high as hiring picked up and new orders increased at the fastest pace since January. The Markit Flash U.S. Manufacturing PMI rose to 53.9 in August from July’s 53.7 final reading. At the same time, the U.S. Leading Indicators surged by 0.6% in July, 0.1% above expectations, after remaining unchanged in June.

However, the industrial metals gains remained limited amid expectations that the Federal Reserve will taper its $85 billion bond purchasing program somewhere in the next three months. Wednesday’s released minutes from the Federal Open Market Committee’s July meeting showed that most of the policy makers supported Fed Chairman Ben Bernanke’s timeline to taper the $85 billion bond purchasing program by the end of the year.

“Almost all participants confirmed that they were broadly comfortable with the committee reducing the pace of its securities purchases later this year,” the minutes revealed. Only some of the members stated that it is important to remain patient and evaluate additional information on the economy before making a decision regarding trimming Quantitative Easing.

According to a Bloomberg survey of economists, 65% of the participants expected that the Federal Reserve will start trimming its $85 billion per month bond purchases after FOMC’s September meeting.

Market players will also be keeping a close eye on Friday’s New Home Sales in the U.S. to further gauge the economy’s recovery pace. The indicator is expected to have declined to 0.490 million units sold in July, down from 0.497 million in the preceding month.