SINGAPORE: London copper was treading water on Tuesday as caution over the timing of any pullback in US monetary stimulus capped prices, but the market was underpinned by signs of resurgent global growth that have lifted copper to three weeks of gains.
China's economic backdrop is brightening and so is its metals demand, said analyst Dominic Schnider of UBS Wealth Management in Singapore. In the short term, this is being overshadowed by uncertainty over the impact of a potential US stimulus tapering programme, he added.
"I do expect some better numbers from China in the next 1-2 months and that gives us support for another leg up in copper prices, but it's clearly not going to be sustained," he said.
US benchmark bond yields hit a two-year high near 3 percent on Monday and emerging market currencies from India to Indonesia tumbled as markets braced for the Federal Reserve to start withdrawing support for the US economy.
China's tight focus on reining in any evidence its economy was overheating would compel it to take cooling steps if factory activity picked up momentum too quickly, which should act as a brake on metals prices, Schnider added.
China's HSBC flash PMI is due on Thursday.
Three-month copper on the London Metal Exchange edged up 0.14 percent to $7,315 a tonne by 0253 GMT, after a loss of 1.3 percent in the previous session.
Copper prices logged gains for a third week running last week, hitting $7,420 on Friday, the highest in more than 10 weeks. Prices are still down almost 8 percent on the year.
The most-traded December copper contract on the Shanghai Futures Exchange sank 0.68 percent to 52,520 yuan ($8,600) a tonne.
Costs to obtain physical copper and zinc have held steady in Europe in recent months as availability has remained tight, offsetting potential supply pressure in the wake of proposals aimed at easing bottlenecks to access metal.
In China, premiums for metal in the country's bonded zones have dropped around $15 since Aug. 8 to $180-$210, according to price provider Shmet, reflecting a lack of appetite by consumers to chase prices at higher levels.
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