SINGAPORE: London copper rose on Tuesday after a business spending survey suggested a recovery in the United States was taking root, but gains were capped amid caution ahead of a Federal Reserve policy meeting and a raft of U.S and China data this week.
Copper prices on the London Metal Exchange have been largely confined in a $7,920-$8,250 range so far this month and market participants do not expect this to change until new year holidays in top consumer China wind up in mid February.
"A positive data point is more likely to provide additional confidence to market players in economic recovery but for any changes to be sustained there has to be significant movements in the physical markets - imports, premiums or stockpiles," said Barclays commodity analyst Sijin Cheng in Singapore.
"But we haven't seen that yet and we're not likely to until after Lunar New Year," she added.
Three-month LME copper climbed 0.24 percent to $8,069 a tonne by 0244 GMT, adding to small gains seen the previous session.
The most-traded May copper contract on the Shanghai Futures Exchange hit its highest since Oct. 19 at 58,850 yuan ($9,500) a tonne before paring gains to trade almost flat at 58,630 yuan a tonne.
Riskier assets, including metals, oil and equities, mostly gained as a rise in a gauge of planned US business spending in December added to a recent run of positive global economic data.
More solid US growth indicators would, however, fuel speculation the Fed may mull pulling back on aggressive easing stimulus. Traders are now waiting for the outcome of the Fed policy meeting and Friday's string of figures including indicators on China's manufacturing sector and a key US jobs report for further cues.
The Fed, whose policy-setting Federal Open Market Committee concludes a two-day meeting on Wednesday, said just last month that it expects to keep short-term interest rates exceptionally low until the US unemployment rate falls to 6.5 percent, inflation permitting.
But figures on Friday are likely to show that the jobless rate was unchanged in January at 7.8 percent, while the economy created 155,000 jobs, the same as in December.
"We would have thought rising equity markets in China or settlement of the US fiscal cliff would have been enough to get things going, but clearly the market is looking for some other form of inspiration," said RBC Capital in a note.
"What form that inspiration will take is yet to be seen, so it looks as if the markets will dance in tune with the dollar until further notice," it added.
Against the dollar, the euro pulled back a little to $1.3450, off an 11-month high of $1.3479 set on Friday. A weaker dollar makes commodities priced in the greenback cheaper for holders of other currencies.
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