By LESLIE JOSEPHS

Commodities prices climbed after Chinese economic data calmed fears of a sharp slowdown in one of the world’s biggest consumers of raw materials. China consumes 40% of the world’s copper. Prices for the metal rose 2.6% on Friday. Above, a copper warehouse near Shanghai this year.

The news also raised hopes for fresh stimulus by the world’s second-largest economy. China’s economy expanded 7.6% in the second quarter, in line with economists’ estimates. Some market participants feared significantly slower growth, which could indicate that China’s consumption of commodities is waning.

“Judging from the market’s reaction, investors were obviously bracing for worse,” said Edward Meir, senior commodity analyst with INTL FCStone, about the rally in copper prices. China’s growth was the slowest since the first quarter of 2009. But instead of giving traders qualms about future demand, it revived hopes that China would soon begin a new round of stimulus measures.

“The Chinese government has already made some moves to lower interest rates and probably will going forward as well,” said Michael McDougall, a senior vice president at brokerage Newedge. China is the world’s top importer of cotton, soybeans and copper and the second-largest user of oil, behind the U.S. Any government move to stir economic activity likely would spur purchases of more raw materials, analysts and traders said. China consumes 40% of the world’s copper, and the news sent front-month July prices up 8.9 cents, or 2.6%, to $3.5005 a pound on the Comex division of the New York Mercantile Exchange.

Copper prices also got a boost from a weaker dollar, which eased against the euro. Copper is traded in dollars and becomes less expensive for investors in other countries when the dollar weakens. Thinly traded cotton for October delivery on ICE Futures U.S. rose 2.4 cents, or 3.5%, to 71.76 cents a pound. Cotton and copper are viewed as barometers of economic health. Both are widely used in textiles and manufacturing, respectively, and can be yardsticks of consumer demand.

“The Chinese numbers just put a little enthusiasm” into the markets, said Louisiana-based independent cotton analyst Mike Stevens.

But the rally could easily unravel if China doesn’t take any steps to stimulate the economy, some traders said. “It might send a little negative sentiment through the market” said Terry Reilly, a senior commodities analyst at Citibank. Bill Nelson, an analyst with Doane Advisory Services, said there still is plenty of economic uncertainty around the world, including in the U.S. and Europe, to limit optimism. “We haven’t turned the corner,” he said. For agricultural markets, however, extreme weather was driving the rally.

Hot, dry weather that has blasted through the heart of the U.S.’s Midwestern corn belt boosted prices for the grain as worries about a smaller crop mount. The most actively traded corn contract, for delivery in September, settled 9.25 cents higher, or 1.3%, to $7.4050 a bushel on the Chicago Board of Trade. Barclays said Thursday that had it raised its 2012 average price forecast for corn to $6.80 a bushel from $5.74.

Corn is used as both food and fuel, with 40% of the U.S. crop going to ethanol production. Brazil—the biggest producer of another food-and-ethanol crop, sugar—is seeing its own weather worries. Unseasonable rain there has cut output this season. Raw sugar for October delivery on ICE Futures U.S. rose 1.2%, to 22.72 cents a pound.

Crude-oil prices nudged higher on the China news, coupled with the Obama administration’s expansion of sanctions on Iran.

Front-month light, sweet crude oil for August delivery on the Nymex settled up $1.02, or 1.2%, to $87.10 a barrel.

—Michael Haddon, Owen Fletcher and Tatyana Shumsky contributed to this article.

Write to Leslie Josephs at leslie.josephs@dowjones.com

A version of this article appeared July 14, 2012, on page B4 in the U.S. edition of The Wall Street Journal, with the headline: China Data Bolsters Prices.

via China’s Booming Consumer Market – Forbes.

via The mystery of the Chinese consumer | The Economist.

via Three snapshots of Chinese innovation – McKinsey Quarterly

via China as a second home market: interview with CEO of Danfoss – McKinsey Quarterly

via A CEO’s guide to innovation in China – McKinsey Quarterly 

via Meet the Chinese consumer of 2020 – McKinsey Quarterly