LONDON, Aug 11 (Reuters) - Copper prices hit a six-week high on Thursday as bets the U.S. Federal Reserve will ease the pace of interest rate rises pushed up riskier assets and weakened the dollar, making dollar-priced metals cheaper for buyers with other currencies.
U.S. data on Wednesday suggested inflation may be peaking, reducing the need for rate increases that would stifle economic activity and metals demand.
The data bolstered faith among investors that rebounds in stocks and bonds will persist, though Fed policymakers said they would continue to tighten policy until price pressures are fully broken.
Benchmark copper on the London Metal Exchange (LME) was up 0.8% at $8,151.50 a tonne at 0940 GMT after reaching $8,189, the highest since July 1.
Prices of the metal used in power and construction are up 17% from a low in mid-July. but still down 25% from a peak in March due to slowing economic growth and demand.
"The peak inflation thesis is pushing base metals up," said Gianclaudio Torlizzi, partner at consultants T-Commodity.
He said signs of tight supply in China were also lifting copper. "The physical indicators are pretty bullish. I think the price will continue to move up," he said.
Stockpiles of copper in Chinese exchange and bonded
warehouses have been falling and import premiums are their
highest since December.
Chinese auto sales surged in July as COVID-19 restrictions eased, though sales for the first seven months of the year were still down 2% year-on-year.
China's copper cathode output rose slightly in July.
The threat of more COVID-19 lockdowns looms over the market, however, with several Chinese cities imposing fresh restrictions to contain flare-ups in case numbers.
In other metals, LME aluminium was up 0.4% at $2,499.50 a tonne, zinc was down 0.3% at $3,599, nickel rose 2.8% to $23,120, lead gained 0.1% to $2,176 and tin was down 0.3% at $24,475. (Reporting by Peter Hobson Additional reporting by Mai Nguyen Editing by Mark Potter)
