Copper futures rise after Greek parliament approves austerity

Forexpros - Copper futures regained strength on Monday, as appetite for riskier assets improved after Greece’s parliament approved fresh austerity measures required to secure bailout funds and avert a sovereign debt default.

On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.885 a pound during European morning trade, climbing 0.6%.

It earlier rose by as much as 1.05% to trade at a daily high of USD3.908 a pound.

Greek lawmakers approved on Sunday a set of spending and wage cuts needed to secure the country’s EUR130 billion bailout package and avoid a sovereign debt default.

The deeply unpopular austerity measures were approved by a 199-74 vote, with 27 lawmakers abstaining from the vote, according to reports.

Attention now shifts to a meeting Wednesday of euro zone finance ministers, who will discuss the approval of the debt-laden country’s second bailout before a March 20 deadline.

Greece has a EUR14.5 billion bond repayment due on March 20 and requires the bailout funding in order to be able to make that payment and avoid a messy default.

Despite the upbeat mood, prices came off their earlier highs amid uncertainty over the implementation of the austerity plan and ahead of the final outcome of the debt write-off negotiations between Athens and its private creditors.

Europe as a region is second in global demand for the industrial metal. Copper prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.

Meanwhile, weakness in the U.S. dollar lent further support. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, declined 0.39% to trade at 78.80.  

A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies.

Speculation that top copper consumer China planned to ease monetary policy to prop up the world’s second largest economy also helped lift copper prices.

China's Premier Wen Jiabao said earlier Monday that the country needs to start “fine-tuning” economic policies this quarter, the most explicit indication of further easing of monetary policy since his pledge to do so last October.

China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Copper prices tumbled nearly 2.7% on Friday as concerns over a chaotic default grew after Greek media reported that a junior member of the country’s three-party ruling coalition refused to back the austerity measures and offered to resign.

Elsewhere on the Comex, gold for April delivery added 0.35% to trade at USD1,731.45 a troy ounce, while silver for March delivery rose 0.8% to trade at USD33.87 a troy ounce.