Copper sprinted to a record peak at $10,000 a ton on Thursday as investors bet supply shortages and buoyant demand growth this year would fuel a strong rally.

The industrial metal used extensively in power and construction, has surged more than 60 percent since last June when financial and commodity markets tumbled on fears of sovereign default in euro zone countries such as Greece.

"There are worries about copper supplies and about the deficit this year," said Barbara Lambrecht, analyst at Commerzbank. "Economic data from the United States and China have helped growth and demand sentiment this week."

Lambrecht said news that London-listed Antofagasta had failed to meet its copper output target for last year highlighted the supply problems.

A recent Reuters survey showed the consensus was for a copper market deficit of 444,000 tons this year.

Tight copper supplies are expected to help propel prices to $12,000 a ton as output struggles to keep up with demand into 2012 and perhaps beyond with the lack of new big mines coming through.

Benchmark copper on the London Metal Exchange was trading at $9,905 a ton at 1557 GMT from $9,945 a ton at the close on Wednesday. Current prices compare with levels below $3,000 in late 2008, in the aftermath of the credit crisis.

Sister industrial metal tin, mainly used in solder for electronics, also extended gains to an all-time peak of $30,920 a ton, a gain of about 15 percent so far this year after a surge of 58 percent last year.

One reason behind base metal price gains in recent years is the generally weaker U.S. currency, which makes base metals denominated in dollars cheaper for holders of other currencies.

Doom and Gloom

Copper's rally this week has been reinforced by data from the U.S. Institute for Supply Management on Tuesday, which showed the U.S. manufacturing sector grew at its fastest pace in nearly seven years in January.

"Friday's U.S. non-farm payrolls will be an important indication about the health of the U.S. economy, which is an important consumer of metals," Credit Suisse Private Banking said in a note.

The United States is the world's largest economy and the second largest copper consumer after China which accounts for nearly 40 percent of global demand estimated at 21 million tons this year.

"The final push was fuelled by global recovery optimism in general and bullish manufacturing PMI releases in particular," said Filip Petersson, commodity strategist at SEB.

"These indicated that the OECD recovery is accelerating while the Chinese economy remains stable."

In China, an official PMI index and another one compiled by HSBC gave different results, but analysts said taken together the two surveys painted a picture of sticky inflation and a moderate slowdown in the world's second-largest economy after 10.3 percent growth last year.

"All told Chinese growth is still very strong and even if it slows, its demand for copper is unlikely to fall much. They still have a lot of infrastructure projects ongoing and the new five-year plan won't change that," a LME trader said.

China's next "five-year plan" will cover the "key period" of 2011-2015. It will be the 12th plan since the ruling Communist Party came to power in 1949.

However, before the plan is announced, focus in China will be on accelerating inflationary pressures and further monetary tightening measures which could, albeit briefly, derail copper demand.

"People are disregarding the potential for monetary tightening in China," said Sean Corrigan, chief investment strategist at Diapason Commodities management.

"They are fed up with the doom and gloom of the last few years, they want to see the best in everything and putting money back into equities and industrial commodities, things that can participate in growth."