Greece Debt Swap Progress Lifts Copper Demand

By Shihoko Goto — Exclusive to Copper Investing News

Greece Debt Swap Progress Lifts Copper Demand

Renewed hopes that Greece will get back on a path to financial stability, coupled w ith  an improved outlook for the Japanese economy  and  weaker dollar , are lifting demand for copper. Still, an uptick in the latest US weekly unemployment claims and persisting longer-term concerns about Europe's grow th prospects continue to keep investors on their toes.

Market eyes are once again on Greece as the country is expected to go through with sovereign debt restructuring. Over three-quarters of bondholders are expected to be eligible for the debt swap, which would require banks, private funds, and other investors to accept a nearly 75 percent reduction in the value of their holdings in exchange for new bonds. The debt swap would cut about 100 billion euros of Greece's public debt, and is essential for the country to qualify for its second 130 billion euro bailout program and avoid default.

“With the short term market perception towards the Greek debt swap agreement improving over the past 24 hours, confidence has improved and the risk-off activity seen over the past couple of days has abated,” stated  Standard Bank in its daily commodities research note Thursday.

Adding to investor confidence is news of a stronger Japanese economy. The country's fourth quarter GDP was revised down to a 0.7 percent contraction, less than its initial estimate of a 2.3 percent contraction.

A weaker greenback has also given a boost to base metals as the dollar's dips make it cheaper for non-US investors to buy. However, a rise in US jobless claims by 8,000 to 362,000 in the week ended March 3 is above what most economists had expected, and puts a damper on those expecting the recent onslaught of strong US data to lead global demand.