Copper reaches 5-week high as European manufacturing expands

LONDON: Copper reached a five-week high in New York after euro-area manufacturing unexpectedly expanded for the first time in two years, easing concern about a further contraction in Chinese factories.

A manufacturing index for the euro region rose to 50.1 this month, Markit Economics said on Wednesday, the first reading since July 2011 above the level of 50 dividing growth and shrinkage.

A Chinese factory gauge from Markit and HSBC Holdings slid to a preliminary 47.7 for July, lower than predicted by economists in a Bloomberg survey.

"Prices are slightly firmer after the often-neglected euro zone displayed some manufacturing growth, led by Germany," Michael Turek, a senior director at Newedge Group in New York, said by e-mail. "This tended to more than offset the disappointing data out of China."

Copper for delivery in September added 0.8% to $3.225 a pound on the Comex in New York, erasing a drop of as much as 1% and heading for a fifth straight gain. Prices touched $3.234, the highest since June 17. Copper for delivery in three months rose 0.9% to $7,105 a metric ton on the London Metal Exchange.

The European manufacturing gauge was projected to come in at 48.8, a separate survey showed. The reading for the Chinese measure would be the lowest in 11 months if confirmed in the final report on August 1.

Prices also climbed before a report predicted by economists to show sales of new houses in the US, the world's second-biggest copper consumer after China, increased for a fifth month in six in June.