LONDON: Copper was slightly steadier on Tuesday as an earlier price correction enticed bargain hunting from top consumer China, cushioning prices, but concerns about slowing growth in the world's top economies muddied the metal's demand picture.
Three-month copper on the London Metal Exchange (LME) traded at $8,976 a tonne at 1035 GMT, up 0.2 percent against a close of $8,960 a tonne on Monday.
Earlier in the session prices hit a trough of $8,870 a tonne, the lowest in 10 days, and remain more than 10 percent from record highs of $10,190 touched in February.
A pick up in volumes on the LME and a price differential between London and Shanghai markets moving in favour of imports, suggest that some Chinese consumers see value in copper at current levels.
"The Chinese physical market is there, but they are waiting....They've seen the ongoing consumption weaknesses taking place in the Europe and the US, and they're waiting for prices to come back to them," said Steve Hardcastle, head of metals trading at Sucden Financial.
Renewed worries about the euro zone's ability to solve its debt problems, while bond yields climb, signalling sovereign debt will be a main driver across markets this week, FastMarkets said.
"With bond yields rising in Europe again the market is likely to be focused on sovereign debt and European banks," said FastMarkets in a note.
"The base metals continue to retreat as they give back some of the ground gained in late August -- however they are all well above the lows from early August and therefore the pull back could still be seen in terms of consolidation."
Switzerland's central bank stepped in to stop investors driving up the franc on Tuesday and stifling a tentative European stock recovery from sharp losses a day earlier.
Concerns have also intensified over US economic health after last week's labour report showed that employment growth stalled in August. A speech by President Obama on Thursday will be closely watched for signs pointing to easier monetary policy.
The US return from Monday's Labor Day holiday could also help set near term direction.
TOOLS DOWN
Adding to support for copper was the prospect of more industrial action that could further stress an already tight supply pipeline.
Workers at the third-biggest copper mine, Freeport McMoRan Copper & Gold's Grasberg in Indonesia, are set to strike from Sept. 15 to Oct. 15 unless the firm meets their demands for a pay rise.
Meanwhile, workers at Peru's No. 3 copper mine Cerro Verde will launch a 48-hour strike on Sept. 7 to win higher pay.
"This highlights the vulnerability of mine supply, which on top is struggling to keep up due to falling ore grades," said Credit Suisse Private Banking in a note.
"Thus, tightening pressures are unlikely to disappear any time soon but to account for the uncertain economic environment, we think it is advisable to protect existing long positions."
In other metals, zinc , used in galvanizing, was at $2,185.75 a tonne from $2,172 at Monday's close.
The Glencore International-controlled Perkoa zinc mine in Burkina Faso will start shipments of concentrate in mid-2012 after years of delays, building to an annual rate of 90,000 tonnes contained metal, joint venture partner Blackthorn Resources said on Tuesday.
Battery material lead was at $2,418.50 from a last bid of $2,430 and aluminium was at $2,386 from $2,387.50.
Copyright Reuters, 2011
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