MELBOURNE: London copper edged up on Wednesday from a near two-week low hit in the previous session as the dollar eased and markets waited for Federal Reserve commentary that may cast fresh light over its outlook for U.S. interest rate rises next year.
Investors were waiting to see whether the Fed will signal any acceleration in the pace of future rate increases to deal with an expected ramp-up in fiscal spending under President-elect Donald Trump.
"Investors are likely to remain subdued as they await the FOMC (Federal Open Market Committee) meeting," ANZ said in a note.
Base metals tend to attract investment as an inflation hedge because prices of real assets rise with inflation, and had rallied in the immediate aftermath of Trump's election win.
Metals have also been supported by signs of steady demand growth in China and as stocks are withdrawn from global exchange warehouses.
"Raw material markets remain well bid, while continued outflows from LME warehouses should see metal prices supported," ANZ said in the note.
Three-month copper on the London Metal Exchange was up 0.5 percent at $5,714 a tonne by 0404 GMT, from the previous session when prices fell 1.3 percent, having hit $5,655.50 a tonne, its weakest since Dec. 1. Volumes were meagre with less than 1000 lots of turnover of the benchmark contract.
Shanghai Futures Exchange copper cut early losses to 0.6 percent, trading at 46,610 yuan ($6,750) a tonne. Shfe aluminium was down 2 percent.
In upbeat demand signals from Asia, surging steel production in China lifted factory output, but private investment began to slow again, leaving the economy more reliant on state spending and mounting debt.
Big Japanese manufacturers' sentiment improved for the first time in six quarters in the three months to December to hit a one-year high, a closely watched central bank survey showed, as stock gains and yen falls brightened prospects for the export-reliant economy.
In metals news, the chief executive of Chilean state-owned Codelco, the world's top copper producer, said on Tuesday that he conservatively sees copper prices averaging $2.40 per pound ($5,291 a tonne) in 2017.
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