Copper inched up on Monday as European leaders agreed on a package to revive growth in the debt-burdened euro zone, which calmed markets and was helped by some spot buying in top consumer China, but worries remained about sagging growth globally.
Benchmark copper on the London Metal Exchange rose 0.3 percent to $7,334 a tonne by 11:24 SA time.
On Friday it dropped 1.7 percent to six-month lows of 7,219.50 before paring losses to end the session down 0.4 percent at $7,310.
Euro zone worries eased somewhat after the leaders of Germany, France, Italy and Spain agreed on a 130 billion euro ($156 billion) package, though German Chancellor Angela Merkel still resisted pressure for common euro zone bonds or more flexible use of Europe's rescue funds.
Many said the relief offered by the package would be short-lived.
“I think the market is going to look at it as not enough, and people will put pressure for more measures to be taken,” Credit Suisse analyst Ivan Szpakowski said.
Weighing on copper, the dollar index rose to hit a two-week high, helped by safe-haven flows.
A stronger US currency against other units makes dollar-priced commodities costlier for holders of other currencies.
Investors were anxiously awaiting a June 28-29 summit of European leaders, who will discuss specific steps towards a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund.
PHYSICAL BUYING
Limited copper restocking by Chinese investors was designed to exploit favourable arbitrage between London and Shanghai supported prices, but London copper's fall to a six-month low on Friday showed markets were still worried the problems faced by Europe, the United States and China might crimp demand for metals.
“There has been some consumer buying for copper, but it was only some spot buying and the size moderate. You won't have the large hedges coming in at this price as people don't have enough conviction and think the market might be trending lower,” Szpakowski said.
In other metals, aluminium was up slightly at $1,866.25 from $1,861.
“Anyone who expected the low aluminium prices to result in numerous production shutdowns was proved wrong by the latest figures issued by the International Aluminium Institute, which revealed that global aluminium production in May actually increased,” Commerzbank said in a research note.
“Following the sharp decline in energy prices and thanks to subsidised electricity prices in China, we are also unlikely to see any significant cuts in production in the foreseeable future, so the aluminium price can be expected to remain under pressure.”
Tin was at $18,610 from $18,675, while zinc, used to galvanise steel was at $1,806 from $1,800 at Friday's close.
Battery material lead was at $1,812.75 from $1,816 and nickel was at $16,442 from $16,575. - Reuters