Monday, 07 January 2013 21:35
LONDON: Copper eased on Monday as the dollar rose and investors remained concerned the US Federal Reserve might halt asset purchases, but losses were limited by an improved growth outlook in the United States and China, and less gloom in Europe.
The dollar edged up versus the euro, making dollar-priced metals more expensive for European and other non-US investors.
In addition, investors remained spooked by minutes from the latest Fed meeting which last week signalled it may rein in easing measures sooner than expected.
On the plus-side, data showed euro zone sentiment improved for a fifth consecutive month in January to its highest in almost two years after a successful Greek bond buyback and a dip in Spanish jobless figures.
Also, data on Friday showed that US employers kept up a steady pace of hiring in December and that the country's vast services sector was expanding at a brisk rate, while manufacturing surveys pointed to growing activity in China.
This compounded the boost to markets after US lawmakers at the end of December struck a deal to avoid going over the so-called fiscal cliff of devastating tax increases and spending cuts, a move that sent copper to two-month highs.
Three-month copper on the London Metal Exchange dipped 0.2 percent to $8,068 a tonne by 1530 GMT after falling almost 1 percent on Friday.
After closing 2012 with gains of 4.3 percent, copper prices rallied to $8,256.50 a tonne on Jan. 3, the highest since Oct. 18. Copper prices are up nearly 2 percent year-to-date.
"Chinese growth is improving, it's not going to be the double digit growth levels of a few years ago but we'll still have China come back. Also, the Fed is going to scale back (asset purchases) at some point but there will still be lots of liquidity around," said Danske Bank analyst Christin Tuxen.
China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high. China's trade and producer price data is due later in the week.
China is the world's top consumer of industrial metals, accounting for around 40 percent of refined copper demand.
"Although recent Chinese numbers have been coming in on the stronger side, the government has yet to make hard decisions with regard to non-performing loans and highly leveraged debt instruments prevalent among retail investors," said INTL FCStone analyst Ed Meir.
"(Also), we would suggest that the biggest threat to the global economy right now is not the European debt crisis, or a Chinese hard landing, or even a strike on Iran, but arguably, the gridlock we face in Washington and the alarming inability of our elected representatives to get anything done."
European shares dipped, although losses were limited by gains in banking shares propelled by regulators' decision to ease new liquidity rules for the sector.
There were signs investors are turning more bullish for copper's 2013 outlook as hedge funds and money managers increased the size of their net longs in the week to Dec. 31, Commodity Futures Trading Commission data showed on Friday.
For copper, speculative investors increased their net longs by 936 contracts to 15,924 for the week.
Signs of increased demand for copper were also seen in new delivery orders - called cancelled warrants for copper in the latest LME stocks data.
Cancelled warrants were at 70,275, near their highest since early May 2012, the most recent LME data showed. Copper for delivery and unavailable to market stands at almost one quarter of LME supplies.
In other metals, three-month zinc fell 0.7 percent to $2,025 a tonne, lead lost 1.5 percent to $2,301.25 a tonne and aluminium shed 0.5 percent to $2050.
In industry news, India's state-run National Aluminium Co Ltd (NALCO) NALU.NS has finalised a long-term export contract with a Switzerland based buyer for 270,000 tonnes of alumina for deliveries in 2013 at 16.53 percent of the LME aluminium price, company sources said on Monday.
Elsewhere, nickel fell 0.3 percent to $17,305 a tonne and tin bucked the trend to rise 0.2 percent to $23,850.
LME nickel stocks rose to 142,248 tonnes, the highest since May 2010
Center>Copyright Reuters, 2013