LONDON: Copper steadied on Thursday after posting its biggest daily rise in nearly two months the day before, as indications that the Federal Reserve might start paring back its vast asset holdings this year hurt appetite for cyclical assets.
Investors also trimmed exposure to risk ahead of a potentially tense meeting between US President Donald Trump and Chinese counterpart Xi Jinping later in the day.
"The minutes from the Fed yesterday talking about reducing the balance sheet, as well as rate increases, have introduced a bit more caution into the market," Societe Generale analyst Robin Bhar said. "The dollar strengthened on the back of that."
Longer-term factors are still offering support for copper however, he said. "There have been lots of headlines about a bullish copper market going forward, with deepening deficits."
The metal, widely used on construction, rose 2 percent on Tuesday as Chinese buyers returned to the market after holidays, and as upbeat US economic data supported expectations that demand will hold firm.
LME COPPER: Three-month copper on the London Metal Exchange was untraded in official midday rings, and was last bid at $5,900 a tonne, little changed from Wednesday's close.
MARKETS: Stocks slipped, bonds rose and the dollar hit a three-week high against the euro as risk appetite was soured by signs the Federal Reserve might start paring asset holdings later this year.
US/CHINA MEETING: Caution ahead of talks between Trump and his Chinese counterpart later in Florida, the first between the world's two most powerful leaders, also weighed on stocks.
TECHNICALS: LME copper may retest resistance at $5,928 a tonne, a break above which could spark a rally to $5,969, the 86.4 percent Fibonacci projection level of an upward wave (c), Reuters technical analyst Wang Tao said.
COPPER: The copper business will recover from crisis mode after plummeting prices for the metal resulted in output cuts, industry executives said at a meeting in the world's top copper producer Chile this week.
FREEPORT: Freeport McMoRan Inc is awaiting final details on a temporary export permit in Indonesia, which would end a 12-week ban that has cost the world's biggest publicly traded copper company nearly $1 billion in lost revenues, its top executives told Reuters on Wednesday.
ALUMINIUM STOCKS: On-warrant aluminium stocks held in London Metal Exchange warehouses, representing metal available for delivery, fell below 1 million tonnes for the first time since May 2008 on Tuesday, to 988,100 tonnes.
LEAD, ZINC: Australian miner South32 Ltd cut output forecasts on Thursday after a fire at its Cannington silver and lead mine. LME lead was up 1.3 percent at $2,341 a tonne in official midday trading, while zinc was 0.9 percent higher at $2,802 a tonne.
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