SINGAPORE: Copper edged down on Wednesday, but stayed near its highest in more than a week hit the previous day after the Bank of Japan announced aggressive monetary stimulus, while physical buying in China was quiet ahead of holidays next month.
Attention is now shifting towards the scale of a revival in economic growth in top consumer China, with traders hoping HSBC's China flash purchasing manufacturer's index on Thursday will provide some fresh momentum.
"Things have fizzled out a little from yesterday," said Thomas Lam, chief economist at DMG & Partners Securities in Hong Kong.
"It's possible in the very near term the China macro backdrop could continue to show further signs of stabilisation and that it could fuel positive sentiment. But given all the uncertainties in the global economy, it's unlikely there will be a sustained significant rally for now."
Three-month copper on the London Metal Exchange was trading at $8,111 a tonne by 0315 GMT, slipping 0.27 percent from the previous session. It gained 1 percent on Tuesday and hit its highest since Jan. 11 at $8,144.50.
Copper has been hemmed in a range of $7,920 to $8,250 this year, with traders and analysts expecting prices to largely remain flat until after the Lunar New Year in mid-February.
The most-traded May copper contract on the Shanghai Futures Exchange slipped 0.1 percent to 58,730 yuan ($9,400) a tonne. It marked its second highest point this year at 59,020 a tonne the session before.
The BOJ announced on Tuesday its most determined effort yet to end years of economic stagnation, saying it would switch to an open-ended commitment to buying assets next year and double its inflation target to 2 percent.
The move had a positive impact on equity markets which in turn helped to lift metals, said a Hong Kong Based trader.
"But I haven't seen any change on the fundamental side which remains quite weak. Traders tend not to build positions until after the Lunar New Year when industry begins restocking," he added.
Markets in China will be closed from Feb. 11-15.
Improving industrial sentiment in Europe was reflected in reviving analyst and investor morale in Germany, which hit its highest level in more than 2-1/2 years in January.
Still, without further fresh signs of growth out of China, metals could enter a soft patch in the near term, Sweden's SE commodity research division wrote in a research note.
"With the recent (dubious) rally on more positive Chinese sentiment having lost momentum, we see better buying opportunities in H1," it said.
"Most likely, the exclusive market focus on Chinese economic conditions will end this year as OECD demand appears increasingly likely to improve."
MARKETS NEWS
BHP Billiton , the world's biggest mining company, reported its quarterly iron ore output rose 3 percent, slightly under analysts' estimates, as it races to keep pace with demand from Chinese steelmakers.
It said that supply from the world's biggest copper mine, Chile's Escondida, is expected to rise 20 percent next year on improving ore grades.
Slowing Chinese growth and a surge of new supply will limit gains for benchmark industrial metal copper this year, with further price slippage seen in 2014 as the market surplus deepens, a Reuters poll showed this week.
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