SINGAPORE: London copper futures fell for a third time in four sessions on Monday, hurt by a shaky outlook for industrial demand, with rising oil prices threatening a fragile global economy and Chinese consumption staying weak.
Copper has risen more than 11 percent so far this year, but investors have been struggling to push it higher with poor demand from top copper consumer China and a debt-strained Europe countering upbeat US economic data.
"The demand outlook isn't very good and it's mainly because of weak physical demand in China," said Grace Qu, analyst at CRU in Beijing.
"We are seeing improving US data, but the European debt crisis is continuing and China's manufacturing PMI data is still (contracting)."
Three-month copper on the London Metal Exchange dropped half a percent to $8,486.75 a tonne by 0330 GMT, after posting its best week since mid-January last week.
The most-traded May copper contract on the Shanghai Futures Exchange rose 1.3 percent to 60,390 yuan ($9,600) a tonne, chasing the Friday gains of its LME counterpart.
Rising energy prices, which touched 10-month highs last week, stirred the spectre of global recession with Europe probably having the most to fear as its brittle economic growth falters.
Those concerns add to worries about Chinese demand, which has yet to pick up strongly since the Lunar New Year break in January.
DIFFICULT
Advance data from HSBC last week already pointed to China's factory sector contracting for a fourth straight month in February as new export orders shrank, suggesting any seasonal recovery in copper demand could be slow.
"While we have a positive outlook for the metals sector, we think markets will find it difficult to break much higher from current levels as long as we do not get clearer signals of strengthening demand from China," Credit Suisse said in a note.
China's National Bureau of Statistics is scheduled to release the official manufacturing activity number on Thursday, and if it confirms the HSBC flash data, copper may be prone to more selling.
Highlighting weak Chinese physical demand, stocks in Shanghai warehouses remained near levels last seen in 2002 at the end of last week, at more than 216,000 tonnes.
That is in contrast to LME stockpiles, which stood at 303,500 tonnes on Friday, the lowest since September 2009.
Nearby supply tightness may have been behind cash copper surging to a premium of more than $20 versus three-month prices on Friday, its biggest in more than a year.
The one bright spot is the US economy, with more positive data coming through on Friday as upward revisions of new US home sales in prior months and a drop in the supply of property on the market added to signs of a budding housing recovery.
A separate report showed US consumer confidence hitting its highest point in a year this month despite a strong rise in gasoline prices.
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