London copper rose from a six-week low on signs of recovery in top consumer China, though gains were capped by weak euro zone data, including in Germany, and ahead of a Federal Reserve policy statement due later on Wednesday.
China's economy is slowly picking up from its weakest period of growth in three years, a survey of purchasing managers (PMI)signalled, with new orders and output at their highest in three months.
Eurozone PMI's were weak, however. Data for October showed businesses suffered their worst month since the bloc emerged from its last recession more than three years ago, forcing them to cut more jobs to reduce costs.
German business sentiment dropped for the sixth successive month in October, in a surprise fall that was bigger than even the lowest forecasts, signalling that the debt crisis is hitting home in Europe's largest economy.
Benchmark three-month copper on the London Metal Exchange edged up 0.51 percent to $7,871 a tonne by 12:15 SA time. It touched $7,807.75 the day before, its lowest level since September 7 and below key support at its 200-day exponential moving average.
“I don't think one should expect too much from China in terms of a pick-up given the government is in transition. Also post LME Week most people are neutral towards metals,” said Societe Generale analyst Robin Bhar.
“The negative news is priced in but, equally, until economies start to move higher, we're not going to challenge the upside.”
The Fed's two-day meeting ends later in the session, though analysts expect it will hold off from taking fresh monetary easing steps, and will instead review the impact of the significant action it took last month.
STILL SLUGGISH DEMAND IN CHINA
Over the next few months, market players will also look out for new policies by Beijing that may affect metals demand, with a leadership change at the Communist Party Congress on November 8.
“London copper is buoyed by today's PMI numbers, but Shanghai copper was mainly held back from further gains by a still-sluggish Chinese copper physical market,” said Orient Futures analyst Andy Du.
In a sign of weak demand, Shanghai Futures Exchange spot copper prices traded at a discount of up to 200 yuan to the ShFE front
month contract earlier, a bigger spread than the previous session.
Also, China's September copper imports jumped 6.93 percent on the year, but the gain was largely due to the arrivals of term shipments booked last year rather than a spike in demand.
“For copper futures to stage a convincing rebound, we need to see Chinese consumption lifting,” said Du.
In other metals traded, lead dipped 0.07 percent to $2,021.50, having hit its lowest level since early September at $2,012.25 on Monday.
LME lead stocks fell by 1,575 tonnes to total 310,975, with most withdrawals seen in Johor, a backlogged warehouses location. Total stocks, however, continue to climb strongly, with large deliveries concentrated in the Belgian port of Antwerp.
Elsewhere, tin rose 0.37 percent to $20,329 a tonne, nickel fell 0.18 percent to $16,333, zinc edged up 0.05 percent to $1,848, while aluminium fell 0.72 percent to $1,932.98 a tonne. - Reuters