Copper may rise for a second day in London as an unexpected gain in European industrial production and lower inventories of the metal in China signal steady demand.

Copper for three-month delivery rose $6, or 0.1 percent, to $9,175 a metric ton by 11:58 a.m. on the London Metal Exchange. Prices advanced as much as 0.5 percent after gaining the most since May 18 yesterday. September-delivery copper was little changed at $4.175 a pound on the Comex in New York.

Inflation in China

Copper gained yesterday as a report showed industrial production in China advanced 13.3 percent from a year earlier in May, little changed from the prior month. Still, the Chinese central bank yesterday increased lenders’ reserve requirements to a record after growth in consumer prices sped up to the fastest pace in almost three years.
“Monetary tightening remains a concern,” Natixis’ Brown said. “The high levels of inflation remain a concern.”
Chinese inflation climbed to 5.5 percent in May, figures showed yesterday. It has topped the government’s 4 percent target each month this year. Inflation may reach 6 percent this month, according to banks from Societe Generale SA to UBS AG, prompting speculation interest rates might rise further after four increases since September.
Borrowing costs may climb “in weeks, if not days,” according to an unsigned editorial in the China Daily today. (source: bloomberg)