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Copper Jumps to Record as Metals Rally

A strike at a mine in Mexico lifts futures prices. Platinum, zinc, nickel, gold and silver also rise amid industrial and investor demand.

April 11, 2006|From Bloomberg News

The price of copper rose to a record Monday, leading a rally in metals as investors bet that returns on commodities would beat those on stocks and bonds. Zinc hit its highest price ever, and nickel touched 1989 levels.

Copper gained after the Mexican government failed to intervene in a 17-day strike at Grupo Mexico's La Caridad copper mine, the nation's second-largest. A leak at a South African platinum plant owned by London-based Lonmin disrupted production and lifted prices.

April copper futures in New York soared 6.85 cents, or 2.6%, to $2.74 a pound. Platinum for April delivery rose $28, or 2.6%, to $1,094.90 an ounce.

In London trading, zinc jumped $100, or 3.6%, to close at $2,911 a ton after reaching a record $2,927. Nickel climbed 3.4% to $17,425 a ton after reaching $17,650, its highest level since March 1989.

The booming economies of China and India are stoking demand for raw materials. China's economy expanded 9.9% last year and appears to be headed for similar growth this year.

Demand from hedge and mutual funds has helped drive prices up. Copper has soared almost 80% in the last 12 months. Zinc has more than doubled.

"The demand story is very robust," said Alfred Wong of UOB Asset Management in Singapore. "We are quite upbeat."

The gains in industrial metals are stoking fresh demand for precious metals as well.

April gold futures jumped $9.20, or 1.6%, to $597.60 an ounce Monday, a 25-year high. Futures maturing in the summer rose above $600 an ounce. April silver futures surged 49.4 cents, or 4.1%, to $12.53 an ounce, their highest level since 1983.

The Goldman Sachs commodity index, which includes copper, zinc and gold, has advanced 22% in the last year, more than double the gain of the Standard & Poor's 500 index.

Barclays Capital forecasts that fund investments in commodities will climb by more than a third to $140 billion this year. Merrill Lynch said money managers should invest directly in commodities, rather than energy and mining stocks, to take advantage of rising prices.

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