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Copper reaches five-month high amid U.S. rate cuts expectations

The copper price was stable on Wednesday, after reaching a five-month high. A weaker dollar and mounting expectations for a U.S. rate cut in the next few days helped to support it.

The price of three-month copper at the London Metal Exchange remained unchanged, $9,981.50 as of 1024 GMT.

Metal prices reached $10,038, their highest level since March 26. The LME delayed the opening of electronic trading by 90 minutes because a technical problem occurred during the pre-opening.

In an email, the LME stated that "this was quickly resolved and now all systems are operating smoothly."

Ewa Mnthey, commodities strategist at ING, believes that the U.S. jobs data, due Friday, will confirm a weakening of the labour market and strengthen the case for a rate cut. Metals that are dependent on growth will benefit from lower interest rates.

She said that concerns over the growth of the economy due to the broad U.S. tariffs on imports continue and are weighing on the sentiment for industrial metals.

Dollar-priced gold and silver are more attractive to buyers who hold other currencies because the dollar index is down by 0.1%.

A private sector survey revealed on Wednesday that in China, the world's largest metal consumer, services activities expanded at their fastest pace in 15 month in August. This was boosted by a stronger domestic demand as well as a rebound of foreign orders.

The Chinese stock market, however, largely ignored the news, and posted their largest drop in a single week. This was mainly due to a decline in the defence industry, as investors took profits after a large military parade.

Zinc, among other LME metals rose by 0.5%, to $2.879 per ton, after reaching $2.900, its highest level since the 28th of March.

Zinc prices are boosted by lower stocks in LME-registered storage warehouses Neil Welsh, Britannia Global Markets' head of metals, says that there is a strong technical trend, but fundamental support still lacks.

LME aluminium remained at $2,618.50. Lead gained 0.4%, to $2,000.50. Tin added 0.1%, to $34,655. Nickel climbed 0.4%, to $15,290. (Reporting and editing by Harikrishnan Nair, Vijay Kishore and Polina Devitt)

(source: Reuters)