By Ed Ballard

LONDON--Copper prices climbed Tuesday in the first London trading session of 2017 in the wake of strong manufacturing data from China.

The London Metal Exchange's three-month copper contract was up 1.45% at $5,596 a metric ton in morning trade, set for its highest close in two weeks. Most other base metals were also in positive territory.

Copper gained around 19% in 2016 thanks to a rally late in the year, amid enthusiasm about the strength of demand from China and to a lesser extent from the U.S., that contributed to a surge of buying by hedge funds and other speculators.

What 2017 will hold for copper depends largely on whether a recent strong run of Chinese economic data can be sustained, and whether President-elect Donald Trump will follow-through on a pledge to boost U.S. infrastructure spending.

China's December Caixin manufacturing purchasing managers index, an indicator of demand from the key consumer of industrial metals, came in at 51.9, up from 50.9 a month ago and the strongest level since early 2013.

Further support came from a surging oil price, with Brent crude adding 2.3% to trade at $58.11 a barrel. Oil influences copper as the two commodities are often traded by funds in the same basket, with a larger share allocated to oil.

Gains in the London market followed a strong session for base metals on Asian exchanges. Brokerage firm Marex Spectron said buying by bullish speculators and short-covering by bearish traders were supporting copper and nickel prices on the Shanghai Futures Exchange.

Marex said base metals may come under some pressure in the first sessions of the year from index-tracking funds shifting money into different commodity markets.

Looking ahead, the next cue for prices could come from U.S. data. Markit's manufacturing purchasing managers' index is due at 2:45 p.m. GMT, while ISM manufacturing PMI and construction spending are due at 3 p.m. GMT.

Among other base metals, aluminum was up 0.4% at $1,695 a ton, lead up 0.1% at $2,017 a ton, nickel up 1.3% at $10,185 a ton and zinc up 0.4% at $2,578 a ton. Tin was down 0.1% at $20,955 a ton.

Willa Plank contributed to this article.

Write to Ed Ballard at ed.ballard@wsj.com

(END) Dow Jones Newswires

January 03, 2017 06:39 ET (11:39 GMT)

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