MELBOURNE: London copper hovered near its weakest in two months on Monday as the dollar gained ground and as investors bet that more mine supply would drag on prices for the rest of the year.
A long weekend in the United States for the Labor Day holiday was set to keep trading in check.
"We are cautious about the near-term price outlook for copper and aluminium ... in view of the pending U.S. Fed rate hikes, slower-than-expected capacity reduction in aluminium in China and a near-term oversupply threat in the global copper market," Argonaut Securities said in report.
"On the demand side, there is a lack of positive catalysts for demand mainly because of some cool-off in the property sector."
China's home prices are expected to rise 10 percent this year due to robust demand, but will nearly stall in 2017 as more cities try to curb sharp price rises, a Reuters poll found.
Three-month copper on the London Metal Exchange had edged up by 0.1 percent to $4,633.50 by 0700 GMT, after closing Friday little changed on the week. Prices sank to a nine-week low of $4,600 a tonne on Tuesday.
"Although the key $4,600 support was successfully tested ... copper is not safe from another challenge in the coming sessions and we know what kind of implications this could have if the level ends up broken," broker Triland said in a report.
Shanghai Futures Exchange copper ended little changed at 36,510 yuan ($5,469) a tonne. ShFE nickel and ShFE tin traded up 1 percent as metals with tighter supply continue to outperform.
In wider markets, U.S. employment growth slowed more than expected in August after two straight months of robust gains and wages were tepid, which could effectively rule out an interest rate increase from the Federal Reserve this month.
Signs of strength in China's industrial sector should give Beijing room to push much-needed reforms through the end of the year, though trade and investment are expected to remain weak, according to Reuters polls.
Hedge funds and money managers sharply increased their net-short position in copper futures and options in the week to Aug. 30, U.S. Commodity Futures Trading Commission data showed.
LME nickel, among last week's best performers with gains of more than 2 percent, slipped amid profit-taking on Monday. LME zinc, however, nudged up to a fresh 15-month high of $2,370.50.
A surprise jump in stainless steel production this year in China, the world's biggest nickel user, may reignite a rally in nickel prices as investors shift focus to demand from worries over Philippine supply.
The Philippines will this week announce the suspension of more of the country's mines for violating environmental regulations, the mining minister said on Monday, as the government wrapped up a seven-week review.
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