US copper futures erased earlier losses to edge higher in early trade on Wednesday, but analysts believed lingering concerns about global economic expansion would likely keep any rally in check.
Exposure of US lenders to subprime mortgages and questions about global liquidity contracting have contributed to the recent reduction of investor interest in risky assets, like copper.
"It's encouraging long liquidation and fears that economic growth, as a result, could contract. That has been the primary factor," said Steve Platt, futures analyst with Archer Financial Services in Chicago.
"You're seeing a flight to quality," Platt said. Copper for September delivery was up 0.45 cent at $3.3210 a lb by 10:41 am EDT (1441 GMT) on the New York Mercantile Exchange's COMEX division, dealing between $3.29 and $3.3320.
Traders were undecided about copper's futures direction as some believed the market's ability to hold above weekly support at around $3.29 could provide some price stability, near term.
Others, however, believed the market looked to be building a short-term top. "Technically, it looks to be forming more of a bearish flag where if a close below $3.25 could send the market back down to the $3.15 level," said one copper dealer. By 10:00 am, futures volumes amounted to 7,009 lots.
US economic data on Tuesday echoed the slowdown concerns after a larger-than-expected drop in May home sales and a 10-month low in consumer confidence rattled both equity and commodity markets.
On Wednesday, new orders for long-lasting US-made manufactured goods tumbled a larger-than-expected 2.8 percent in May in a sign the struggling US manufacturing sector may be weaker in the second quarter than expected.
Despite the recent fears surrounding economic growth, lingering supply disputes in North and South America continued to lend support. Copper output at Chile's Codelco was unaffected by a second day of protests staged by subcontract workers, who on Monday blocked roads and set fire to buses, Codelco's chief executive officer said on Tuesday.
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