SINGAPORE: Copper held near two-week peaks on Tuesday as positive manufacturing data in the United States and China kept investors' upbeat mood mostly intact in slow trading in Asia.
Copper rose more than 2 percent on Monday, its biggest single-day gain since February, although thin trading volumes - with China shut for a public holiday - made it difficult for the industrial metal to extend the rally.
Three-month copper on the London Metal Exchange slipped 0.4 percent to $8,610 a tonne by 0357 GMT, its first loss in four sessions.
But the session's high of $8,623 was in striking distance of a two-week high of $8,653 touched on Monday.
Prices need to fall at least 5 percent to encourage more buying, said Dominic Schnider, executive director for wealth management research at UBS.
The combination of data showing Chinese manufacturing activity at an 11-month high and a forecast-beating US ISM factory activity index fueled Monday's rally.
But Schnider said it may be too early to say both the US and Chinese economies have turned the corner.
"The Chinese PMI data is so volatile so I would be rather cautious and US construction spending, which is a real, hard number compared to ISM, remains weak," he said.
The US ISM data also showed some hints of weakness. The indices for new orders and exports slipped, while inventories rose, pointing to softening demand.
Technical charts also suggest copper is facing resistance at $8,655.
Trading volume was an extremely lean 604 lots on LME Select, with Chinese financial markets shut for a three-day public holiday through Wednesday. Shanghai reopens on Thursday.
Upbeat US and Chinese manufacturing numbers helped counter data in the euro zone where factory activity shrank for an eighth straight month, underscoring the uneven pace of global economic growth.
But copper's modest losses on Tuesday suggest investors may be ready to bid up prices again, given a brighter economic outlook and still tight global supplies. Copper has gained more than 13 percent so far this year, but had held a fairly tight range for the past two months.
The LME cash-to-three month spread has been in backwardation since early March, meaning prices for nearby delivery are higher than for further forward months, with cash copper at a $21 premium over three-month material on Monday. The backwardation narrows but extends through May-June, pointing to tightness in immediate supplies.
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