LONDON: Copper edged down on Tuesday, but stayed near four-month highs as the euro rose versus the dollar on a survey that showed the euro zone may yet escape recession and data showing dwindling stocks of the metal used widely in construction.
Three-month copper on the London Metal Exchange was off 0.3 percent to $8,334 a tonne by 1033 GMT, after hitting a session high of $8,402.75, just off the four-month peak of $8,428.50 reached on Friday.
Copper jumped 1.8 percent on Monday, its sharpest rise since Jan. 12, helped by the euro's surge to near three-week highs against the dollar and China's record imports of refined copper in December.
"One of the factors yesterday and today has been the strength of the euro versus the dollar. There is a sense that Europe as a whole is doing alright despite the various problems that there are," said BHP Paribas strategist Stephen Briggs said.
"That currency pair has often been a driver. It is one of the of the drivers this year, and has been a driver particularly in the last day or so."
The euro hit a near three-week high against the dollar and rose close to a four-week peak against sterling on Tuesday, buoyed by better euro zone PMI surveys that raised hopes the currency bloc can avoid slipping into recession.
A weaker dollar can lift dollar-denominated commodities by making them less expensive for consumers using other currencies.
DWINDLING STOCKPILES
Adding to the positive tone, China released its final trade data for the month of December last Friday which showed that apart from lead and tin, imports of all metals rose, with copper inflows reaching a new all-time high.
Hopes that Chinese demand will stay strong and large stock withdrawals in LME-monitored warehouses, along with expectations global production may continue to be hit by disruptions, have combined to lift copper by 10 percent so far this year.
Latest data shows that copper stockpiles monitored by the LME stood at 342,250 tonnes, the lowest since October 2009.
"The continued downward trend in LME stocks for copper is helpful," Briggs said, but added: "There must be an increasing concern that this rally is getting a bit over extended, but there isn't anything to stop it at the moment."
Credit Suisse said in a research note that industrial metals could see some profit-taking as the week progresses. Trading activity was thin in Asia with many markets, including China, shut for the week-long Lunar New Year holiday.
Tin was at $22,050 from $22,150 at the close on Monday, while zinc was at $2,082 from $2,059. Lead was at $2,253 from $2,244 and aluminium was at $2,240 from $2,238. Nickel was at $20,449 from $20,305.
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