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Copper Gains on Stimulus Talks in China

February 4, 2015 at 12:16 by Vladimir Vyun

Futures for copper gained today on speculations that slowing economic growth in China gives incentive for policy makers to stimulate the economy. Today, the People’s Bank of China decreased the ratio of cash that banks should put aside as reserves, increasing liquidity in the Chinese financial sector. There were talks that the central bank may also cut interest rates.

Indeed, China needs to reinvigorate its economy as its growth was the slowest since 1990. Meanwhile, capital outflow was the biggest since 1998. Another sign of problems is the decline of manufacturing sector that was demonstrated by both government and private reports earlier this week.

China is the world’s biggest consumer of copper, meaning that its economic performance has strong influence on behavior of the industrial metal.

March futures for delivery of copper went up 0.45 percent to $2.5930 per pound as of 12:03 GMT on COMEX today.

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