SHANGHAI: London copper slipped on Thursday as gains in the past month kept Chinese buyers at bay and the euro zone debt crisis continued to weigh on sentiment, but upbeat global manufacturing data is expected to keep a floor under prices.
Three-month copper on the London Metal Exchange inched down 0.38 percent to $8,408 a tonne by 0436 GMT, partly reversing gains from the previous session. The metal rose 9.5 percent in January, its biggest monthly increase in three.
The most-traded April copper contract on the Shanghai Futures Exchange was up 0.35 percent to 59,710 yuan ($9,400) a tonne.
Factory activity rose in China, the United States and Germany in January, and the three manufacturing superpowers drove gains in global output even as Europe struggles with the fallout from its festering debt crisis.
"The market is digesting the supportive PMI numbers, which have confirmed that industrial activity looks considerably better compared to Q4 last year, but there's some uncertainty, especially over the funding stress in Europe," said Stefan Graber, a Credit Suisse Private Banking analyst based in Singapore.
"In China indicators tell us that physical demand is not pointing towards strengthening. A positive payrolls number on Friday to follow up on the PMI figures could line us up for a good week, but some retracement or at least consolidation for metals looks more likely."
Front-month SHFE copper was traded at a 700 yuan discount against the April contract, from a premium during August to December, flagging a lack of nearby appetite for metal.
Higher London prices against Shanghai were also discouraging imports, suggesting that Chinese buyers were not eager to make purchases at these levels.
"After the holiday, the domestic spot market is not very active because lots of plants should get back to work after next Monday, the end of Chinese spring festival on the Lunar calendar," a trader at a Chinese merchant said.
"The discount on the spot market continues." Elsewhere, traders seeing weak appetite from top consumer China queried the bullish credentials of falling LME copper stocks in the United States.
Underpinning the metals, the dollar lost ground against the euro and commodity currencies as risk sentiment improved after a batch of manufacturing data from China to Germany allayed the market's worst fears about global growth.
A weaker dollar makes commodities less expensive for holders of other currencies.
In cooling news for lead demand, North American shipments of replacement automotive batteries slipped by 2.2 percent in December from November, and dropped 6.3 percent from December 2010, a US industry group said.
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