By Manolo Serapio Jr. MANILA (Reuters) - Copper surged to its best level in 10 months on Friday, and is headed for its biggest monthly gain since March, as buoyant data and earnings fanned hopes for a recovery in global demand. Shanghai copper and zinc hit their 5 percent ceilings for the day as Asian stocks rose to 11-month highs with upbeat corporate earnings reports around the world suggesting companies are coping well and poised to benefit from any recovery. "This bull commodity trend will be with us for a very long time still, optimism has been with us and will remain with us on any reasonable dip we have," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney. Shanghai's benchmark third-month copper closed up 2,150 yuan from its settlement Thursday to 45,260 yuan a tonne, a level not seen since early October. The most-active November contract also ended at its upside limit of 45,170 yuan. Shanghai copper, up 3.6 percent from last week, climbed nearly 11 percent in July, its biggest gain since chalking up a more than 20 percent jump in March. Zinc finished at its upside limit of 14,510 yuan while aluminium was at 15,080 yuan, after peaking just 30 yuan shy of its limit. Both closing levels are the highest since September. Three-month copper on the London Metal Exchange rose $119 to $5,720 a tonne by 0701 GMT, on course for a 3.6 percent weekly rise and a 15 percent surge for the month, its largest since a 17 percent increase in March. The LME metal touched a fresh 10-month top of $5,747.80 earlier. A sharp fall in the number of U.S. workers collecting long-term unemployment aid and a surge in economic sentiment in the euro zone to an eight-month high helped the metals complex continue a rally that has lifted copper more than 80 percent this year. Investors also took comfort in China's promise on Thursday it would maintain a loose monetary policy to support economic recovery, helping calm investors' nerves rattled a day earlier by indications China may tighten lending. BUBBLE But analysts are concerned about the massive rise in commodity prices. "This could lead to a bubble, an inflationary pressure," said Barratta at Commodity Broking. "How do you push the increased cost of primary imports through economies that don't have wage growth? They don't, so what happens? It all falls down." Chinese demand was hugely behind the surge in prices of most metals this year and investors are hoping western economies can take up an expected slack in Chinese imports in the second half. "A big slowdown in Chinese import buying is the biggest risk to metals prices, but there is little sign of that developing yet and a higher floor for metals prices has been established," Barclays Capital analysts said in a note. "By Q4 and the beginning of 2010, the OECD restocking cycle should ramp up, opening up the potential for a second leg to the price recovery," they added. But the Obama administration suspending a $1 billion program aimed at spurring U.S. auto sales, which should lift metals demand, may be a dampener to the current rally. Investors will be keeping their eyes peeled on advance U.S. second-quarter GDP figures, to be released at 1230 GMT, which are expected to show that the decline in the world's largest economy has slowed enough to justify talk of stabilisation. Also due later is weekly metals inventories data from Shanghai warehouses. | 
