Commodities further emerged as an alternate investment as Ireland inched closer to accepting a bailout for its debt-ridden banks while China is still considering actions to lower inflation – which caused a massive tumble in the price of copper earlier – but wariness about those developments appears to be on hold.
"The reality is that China remains strong and is not likely to weaken significantly," David Thurtell, an analyst at Citigroup Inc. in London, told Bloomberg. "There was very strong consumer demand for base metals at the lows yesterday."
The dollar fell, which typically boosts the price of dollar-denominated commodities as they get cheaper for overseas buyers. Falling inventories have also played a role – Chinese consumption shows no signs of letting up, and copper production hasn't ramped up significantly.
As long as China keeps buying, the copper rally will continue.
"Despite that relief rally, markets will remain focused on the debt restructuring/bailout negotiations in Dublin today," Chris Weafer, Moscow-based chief strategist at UralSib Financial Corp, told Bloomberg.
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