Copper eased on Monday due to concern about over-supply and demand in commodity-consuming giant China, although optimism generated by forecast-beating US jobs data limited losses.
Copper rallied about 2 percent on Friday after the US labour market data boosted confidence in recovery of the world's largest economy, and Greece's success with a debt swap deal eased fears about the euro zone debt crisis for the time being.
But investors were wary about large copper stockpiles that have accumulated in Shanghai's warehouses, where stocks rose to 224,781 tonnes last week, their highest level since July 2002.
Three-month copper on the London Metal Exchange fell 0.49 percent to $8,448.25 a tonne from $8,490 by 12:51 SA time, pausing after a three-day rally.
“Markets are still struggling for real conviction over (price) direction. In copper especially the market seems to still be focused on the demand side of the story, so slower growth in China etc.,” said Macquarie analyst Duncan Hobbs.
“Investors at the moment are paying less attention to the supply side of the story where miners are struggling to meet existing demand never mind future demand.”
China's copper imports remained surprisingly strong in February, with inflows of the industrial metal up 17 percent from January and double a year earlier.
But many analysts fear the metal is piling up in warehouses, rather than being consumed.
Data out on Friday showed copper output in both January and February hit its lowest since the first quarter of 2011 as demand for the metal was blunted by slower economic activity.
PEAK
“Theoretically we are in the peak consumption season but it doesn't feel like it this year,” said a Shanghai-based physical copper trader, “Factories are not in any rush to stockpile the material, as the overall economic situation has weakened.”
China, which consumes about 40 percent of the world's copper, has cut its 2012 growth target to an eight-year low of 7.5 percent, dampening hopes that its appetite for these materials would continue to expand rapidly.
“For prices to rise on a sustained basis, more signs of firming Chinese demand are needed, in our view. We believe that near-term trading conditions are likely to remain choppy,” said Credit Suisse analysts in a note.
Money managers, including hedge funds and other large speculators, reduced their net length in US copper futures and options by 2,003 lots to 13,615 lots in the week ended March 6.
Copper has gained around 11 percent this year due to relief that Europe's debt crisis did not escalate as feared, though the outlook going forward is more murky, with fears over an end to central bank policy easing and weak eurozone growth.
In other metals traded, LME aluminium lost 0.6 percent to $2,226.50 a tonne from $2,240, extending a 3.8-percent slide in the previous week - its biggest weekly drop since the end of November.
Latest data showed LME stocks fell 2,600 tonnes, though remained near record levels at 5.01 million tonnes, with most of the metal locked up in financing deals and unavailable to the market.
LME tin fell 0.43 percent to $23,100 a tonne from $23,200, but prices gained nearly 20 percent so far this year, leading the industrial metals complex.
The outlook for tin going forward is shaky though, especially amid latest news that refined exports from Indonesia, the world's top exporter, soared 35 percent on the year to 8,324.73 tonnes in February.
Zinc, used in galvanizing fell 0.36 percent to $2,062.50 from $2,070, battery material lead edged up 0.28 percent to $2,126 from $2,120, while stainless-steel ingredient nickel dropped 0.43 percent to $19,217 from $19,300. - Reuters