LONDON: Copper prices advanced on Tuesday after China cut mortgage rates, but gains were capped as investors await more support for the economy of the world’s top metals consumer.

Three-month copper on the London Metal Exchange was up 0.7% at $8,490 a metric ton by 1600 GMT. LME copper has rebounded by more than 4% since touching the lowest in nearly three months on Feb. 9.

US Comex copper futures rose 0.3% to $3.85 per lb.

China announced its biggest ever reduction in the benchmark mortgage rate on Tuesday, cutting the five-year prime rate by 25 basis points.

“Cutting mortgage rates more than expected is clearly a good thing, but people are looking for more action from the central bank,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

“I think the market is also waiting for earnings reports from the mining companies to get a clear view on how they see the outlook.”

Analysts have forecast a copper deficit from this year on signs that supply may not be as robust as previously thought after Panama ordered the closure of First Quantum’s 350,000-ton mine and producers such as Anglo American and Vale Base Metals lowered annual guidance.

LME aluminium fell 0.4% to $2,188 a ton after LME inventories rose to a six-week high of 564,675 tons.

The short-term outlook for aluminium was weak after it broke below the key technical level of $2,200, Hansen said.

Funds were building short positions in aluminium on both the LME and Shanghai Futures Exchange, said Al Munro, of broker Marex.

Metals also gained support from a weaker dollar, making dollar-priced metals less expensive for buyers using other currencies.

With China’s return from the Lunar New Year holiday break, traders and analysts will be looking for demand clues over the coming weeks and prospects of a pick-up in construction activity as winter draws to an end.

Among other metals, LME nickel dipped 0.5% to $16,265 a ton, zinc eased by 0.8% to $2,382.50 and lead was little changed at $2,042.50 while tin edged up by 0.3% to $26,505.