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Copper climbs after China relaxes quarantine rules

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LONDON — Copper prices rose on Tuesday as

a weaker dollar reinforced hopes for stronger demand after top

consumer China relaxed its COVID-19 quarantine rules, though

gains were capped by concerns over the global economy.

Benchmark copper on the London Metal Exchange (LME)

traded up 1% at $8,500 a tonne in official rings. Prices of the

metal viewed by investors as a gauge of economic health had

touched $8,122.50 on Friday, the lowest since February 2021.

“China’s hard lockdowns have hit manufacturing activity and

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industrial metals demand,” said Julius Baer analyst Carsten

Menke. “Markets fear economies can’t cope with this mix of high

inflation and tightening monetary policy.”

COVID: China will halve to seven days its COVID-19

quarantine period for overseas visitors, with a further three

days spent at home.

The country’s state planner also boosted sentiment by saying

it would roll out tools in its policy reserve in a timely way to

cope with economic challenges.

Clues to Chinese demand for industrial metals will come

later this week from surveys of purchasing managers in the

manufacturing sector.

DOLLAR: A weaker U.S. currency makes dollar-priced metals

cheaper for holders of other currencies, which tends to boost

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demand. This relationship is used by funds to generate buy and

sell signals from numerical models.

GROWTH: Rising inflation and interest rates have fueled

worries about a global economic recession.

SPREADS: Concerns over low zinc stocks in LME-registered

warehouses have eased. This can be seen in the narrowing premium

for cash metal over the three-month zinc contract ,

last at $66 a tonne compared with more than $200 last week.

But zinc availability on the LME remains a problem as

canceled warrants — material earmarked for delivery — at 77% of

the total indicate that more metal is due to leave LME

warehouses over coming weeks .

Three-month zinc rose 1.7% to $3,376 a tonne.

OTHER METALS: Aluminium was up 1% at $2,519.5, lead

was down 0.5% at $1,994, tin gained 2.4% to

$27,650 and nickel jumped 4.5% to $23,915.

(Reporting by Pratima Desai

Additional reporting by Brijesh Patel in Bengaluru

Editing by Vinay Dwivedi and David Goodman


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