Copper edged lower on Wednesday after two days of gains as worries about the US "fiscal cliff" and renewed problems in the European debt crisis outweighed optimism over signs of an economic pick-up in top metals consumer China. Three-month copper on the London Metal Exchange ended at $7,640, down from Tuesday's close of $7,680 a tonne.
The benchmark industrial metal has shed about 9 percent since touching a peak of $8,422 on September 19 after a month-long rally driven by announcements of central bank stimulus measures. Adding to concerns about the US economy was data showing a drop in US retail sales in October, for the first time in three months, which suggests a loss of momentum in spending early in the fourth quarter.
But some optimism about outlook for China, which accounts for about 40 percent of global copper demand, helped keep falls in check with all eyes on new leadership and any signs of policy measures that could help boost metals prices. "We now could see some more significant policy pronouncements coming out over the weeks ahead as the new leaders work through decisions that were likely piling up ahead of the transition," said Edward Meir, analyst at INTL FCStone.
Markets were also on edge, however, as a wave of anti-austerity strikes spread across southern Europe on Wednesday, a potent reminder of the continents unresolved debt crisis, and euro zone factory output in September fell the most in nearly four years. Metals markets are likely to spin wheels until the end of the year as they wait for resolution of the US fiscal cliff of potential spending cuts and tax increases that could send the US economy into recession, said Wiktor Bielski, head of commodities research at VTB Capital said.
US President Barack Obama is due to meet with top business leaders about the fiscal cliff on Wednesday, but both sides stood their ground as they gathered in Washington on Tuesday. "There doesn't seem to be much scope for upward momentum at the moment. I think we would need to see some fund activity if the price was going to get back above $8,000 again. It just looks steady as she goes sideways for the time being."
Aluminium ended at $1,970 from Tuesday's close of $1,983, slipping back after it gained earlier in the session after China resumed its stockpiling programme to asset smelters hit by sluggish demand and low prices. Earlier in the session it touched $2,007, the highest in over three weeks.
China's State Reserves Bureau (SRB), which plans to buy 160,000 tonnes of aluminium, postponed a tender for primary aluminium by a day to Thursday, two sources said. Zinc, the other metal China's SRB will be stockpiling, closed at $1,950 a tonne from $1,934, and hit its highest level in a month at $1,964 earlier in the session. Tin ended at $20,475 from $20,400, lead closed at $2,182 from $2,151 and nickel ended at $16,155$16,050.
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