LONDON: Copper rose on Tuesday as China's affirmation of economic growth targets and expectations of further stimulus measures reassured investors and as concerns over a Chinese probe into metal financing receded.
Three-month LME copper was at $6,716 a tonne at 1000 GMT, up 0.4 percent from the previous session's close.
China is confident it will hit its growth target of 7.5 percent this year, Chinese Premier Li Keqiang said, adding the government was ready to adjust policy to ensure it does. Beijing also said a cut in the reserve requirement ratio that banks must hold could also apply to big state banks.
China is the world's top metals consumer, accounting for 40 percent of global refined demand.
"China has cut its reserve requirement ratios for the first time in a long while and that is monetary easing Chinese style," said Nic Brown, head of commodities research at Natixis.
"There is potentially more of that and other forms of stimulus that can be rolled out of necessary in order for the government's growth targets to be achieved. That has helped the metals market."
Economic growth in China has been dented by weakness in its property markets, which targeted stimulus should help put back on track, said Helen Lau, a senior mining analyst at UOB-Kay Hian Securities in Hong Kong.
Data on Chinese house prices for May is due on Wednesday.
"The government will continue to fine-tune to provide enough financing for smaller enterprises and to help support the overall economy," she said.
"These news headlines have supported copper prices in terms of sentiment, but I do not see any real improvement in fundamentals, especially with seasonal demand weakness coming in," she said.
Prices for the metal used in power and construction rebounded from a 1-1/2 month low of $6,614.75 hit last week following news that Chinese authorities are investigating the use of cargoes of metal as collateral in financing deals in China. The move had raised fears about trade in the metal.
"Worries about the Qingdao port probe have calmed down a little now that is has become clear that the investigation is only targeted at double pledging of collateral," Brown said.
"It is not a signal that metal financing trade will dry out. It is just that you need to play by the rules. Metal financing is an integral part of the copper trade... we will return to some sort of business as normal."
Copper premiums in Shanghai bonded warehouses fell given tighter credit in the wake of a probe into metals financing in China's Qingdao port, edging back by $2.5 to $65-$85, down by nearly half from $110-125 two weeks ago.
In industry news, Indonesia and U.S. miner Freeport-McMoRan Copper & Gold Inc have agreed on the basic framework for contract renegotiations for the world's fifth-largest copper mine, a further step in efforts to resume copper exports.
Indonesia's biggest copper producer and fellow miner Newmont Mining Corp halted copper concentrate shipments in January when the government introduced new mining rules, including an escalating export tax that the two firms say violates their mining contracts.