Copper edged up on Thursday from the previous session's three-week low, helped by a weaker dollar and by hopes that a soft Chinese manufacturing reading will spur Beijing to do more to stimulate the world's No 2 economy. The metal was also supported by inventory data. LME stocks dropped to 332,225 tonnes on Thursday and have generally stayed level since late March - calling into doubt bets that the market will move into strong surplus this year. Shanghai Futures Exchange (ShFE) stocks are at their lowest level in three months. Three-month copper on the London Metal Exchange ended up 0.6 percent at $6,260 a tonne, after touching $6,194 on Wednesday, its weakest since April 30.
"Copper has been the only metal on an upward trajectory since end-January. Net we haven't had any massive inventory upside and I'm not convinced we will. However, short term if we get a return to stronger US data and dollar strength, prices will struggle," said Citi analyst David Wilson. The euro rose against the dollar for the first time this week, helped by nascent signs of a recovery in euro zone activity and a rise in German Bund yields which narrowed the spread over US Treasuries.
A weaker dollar makes dollar-priced metals cheaper for non-US investors. Elsewhere, Chinese factory activity contracted for the third month in May and output shrank at the fastest rate in just over a year, a private survey showed, spurring hopes for more stimulus. Also, China's imports of unwrought copper and copper alloy were 380,000 tonnes in April, taking imports in the first four months of the year to 1.35 million tonnes, down 14.7 percent from a year ago, data showed.
Aluminium fell to $1,773 from $1,783 at Wednesday's close. Earlier in the day, it dipped 0.6 percent to $1,772, its lowest level in about a month. "As in Europe and the US, the plentiful supply situation is also driving physical premiums down significantly on the Japanese spot market. We assume that premiums in all key sales markets will fall even further," said Commerzbank.
Tin was the biggest loser in the LME complex, closing 1.7 percent down at $15,825, while nickel fell 0.8 percent to $13,000 a tonne on the day when LME stocks reached another record high. Lead was the biggest gainer, climbing 2.2 percent to $1,972 a tonne. Zinc edged slightly down, closing at $2,190, from $2,200 on Wednesday.
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