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Copper rebounds on weaker dollar; China COVID outbreaks cap gains

Kitco News

LONDON, Nov 22 (Reuters) - Copper snapped a four-session run of losses on Tuesday as the U.S. dollar weakened, but rising COVID-19 cases in top metals consumer China capped the upside.

Three-month copper on the London Metal Exchange was up 1.8% at $8,020 a tonne by 1700 GMT. It has pulled back about 7% since touching a five-month peak on Nov. 14.

U.S. Comex copper futures climbed 1.5% to $3.63 a lb.

"The dollar is soft, yields are lower and that's supporting the general level of risk appetite in the market," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

The dollar index slipped from more than a one-week high against its rivals, making greenback-priced metals less expensive for buyers holding other currencies.

Copper's correction lower in recent days was largely driven by worries about possible pandemic-related shutdowns in China that would curb metals demand, forcing bullish investors to cut their positions, Hansen said.

China's capital Beijing shut parks and museums on Tuesday and Shanghai tightened rules for people entering the city as Chinese authorities grapple with a spike in COVID-19 cases.

"The market seems to be taking the view that the Chinese outbreak is a temporary one, but one that could last longer than expected, so that's keeping a lid on any exuberance," Hansen added.

The most-traded December copper contract on the Shanghai Futures Exchange ended daytime trading 1.1% lower at 64,410 yuan ($8,996.06) a tonne.

"A surge in cases during winter will likely test the resolve of officials. Fears of supply disruptions also eased after BHP averted a strike at its Escondida copper mine in Chile," ANZ Research said in a note.

BHP said on Monday it had reached an agreement with a worker's union to avoid a strike planned at Escondida, the world's largest copper mine.

Inventory supply has been rising, with on-warrant copper stocks in LME registered warehouses - those that have not been earmarked for removal - having surged by 88% in less than two weeks.

In other metals, LME aluminium climbed 2.3% to $2,434 a tonne, nickel surged 4.2% to $26,030 and tin advanced 3.2% to $21,840, but zinc dipped 0.1% to $2,904 and lead eased 0.4% to $2,093.

(Reporting by Eric Onstad; Additional reporting by Brijesh Patel in Bengaluru; Editing by Shounak Dasgupta, Paul Simao and Richard Chang)
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