July high-grade copper futures rose for the first time in three days on Thursday morning, up 0.85% from the prior day's close after Spain vowed to cut their burgeoning budget deficit.
Spain said it will cut public wages by 5% this year and freeze them next year in an effort to bring its budget deficit down to 6% of Gross Domestic Product (GDP) in 2011. Spain also will suspend a pension increase, scrap a subsidy for new parents and trim foreign aid, the country's prime minister told lawmakers yesterday. 'Despite all the events that have been going on in Europe, and despite the changes that are taking place in China in terms of monetary tightening, we still think the global economy will continue to recover,' said Nic Brown of Natixis Commodity Markets. 'We remain constructive and optimistic on base metals.' Concerns about China's real estate bubble recently dented copper futures. An official report released earlier this week showed China's consumer prices rising 2.8% in April from a year earlier, the highest in 18 months, while a surge in property prices to 12.8% implied that recent monetary tightening was insufficient to tame inflation. New lending was also surprisingly higher than anticipated over the period, at 774 billion yuan. The latest data could encourage China to introduce additional measures to curb soaring real estate prices, and in my view an aggressive rise in interest rates may be on the agenda if Europe's debt woes ease.