KUALA LUMPUR: London copper inched up on Tuesday, edging off a two-day low in the previous session, as a euro zone pact to raise IMF resources boosted market confidence, though investors' year-end caution is set to push copper to its first annual decline in three years.
Three-month copper on the London Metal Exchange gained 0.32 percent to $7,283 a tonne by 0437 GMT, reversing some losses from the previous session, when prices dropped 1.2 percent. The metal, used in pipes and wires, has fallen 24 percent this year.
While China and the US are bigger copper consumers than Europe, investor confidence has been eroded as the euro zone's two-year debt crisis drags on, said Gavin Wendt, founder and senior resource analyst at MineLife Pty Ltd in Sydney.
"Europe's impact has more to do with sentiments," he said. "The copper market moves more these days on demand in China and developments there." The most-traded March copper contract on the Shanghai Futures Exchange slipped 0.19 percent to 53,480 yuan ($8,400) a tonne.
China accounts for about 40 percent of the world's refined copper demand.
Euro zone ministers agreed on Monday to boost IMF resources by 150 billion euros to ward off the debt crisis and won support for more money from EU allies, but it was unclear if the bloc would reach its 200 billion euro target after Britain bowed out.
The European Central Bank said the risks to financial stability in the euro zone had increased considerably in the second half of this year, but a break-up of the single currency bloc is unthinkable.
The downtrend is also reflected in Shanghai copper, with prices expected to end the current consolidation within a triangle soon and fall to 44,650 yuan per tonne over the next three months, Wang said.
The euro edged down in early Asian trade on Tuesday, creeping closer to an 11-month low hit last week after European Central Bank President Mario Draghi quashed hopes for more aggressive bond purchases that have helped control European yields.
DOLLAR FACTOR
The dollar climbed against a basket of major currencies on Tuesday, the first gain in four days.
A stronger US dollar may limit any increases in copper, as the greenback's gains make commodities more expensive for holders of other currencies.
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