LONDON: Copper edged up on Wednesday on a report that China's central bank will provide the country's biggest banks with fresh loans to bolster the economy of the world's largest metals consumer.
Investors also looked ahead to a US Federal Reserve policy statement later where the bank may indicate its thinking on the timing of any interest rate move.
Media reports said China's central bank is injecting a combined 500 billion yuan ($81.35 billion) of liquidity into the country's top banks.
"This 500 billion yuan is going to find its way through to production and that will help boost growth. You could say it's a rational response by the Chinese authorities to acutely weak data over the weekend," said Natixis' head of commodity research Nic Brown.
Factory output in China, which consumes some 40 percent of the world's copper, grew at the weakest pace in nearly six years in August, the latest in a string of weak economic numbers.
In the United States, an 1800 GMT statement from the Fed is likely to discuss the timing of its first rate hike, with financial markets undecided as to how hawkish they expect the central bank to be.
They had been bracing for the Fed to drop its promise to keep rates near zero for a "considerable time", but a report on Tuesday from the Wall Street Journal said the bank might keep the key phrase in its policy statement.
The change in rate expectations on Tuesday fuelled short-covering and stop-loss buying across metals including copper, traders said, as cheaper capital supports industry and investors.
Benchmark copper on the London Metal Exchange ended at $6,930 a tonne, up 0.4 percent, after hitting a one-week high of $6,992 a tonne on Tuesday.
Looking ahead, copper prices are still broadly expected to weaken towards year-end when fresh supply rolls on to the market.
"China buying had a cracking start to the year but has been softer in the past few months and credit has also tightened a little as a result of the port financing scandal in Qingdao," analyst Daniel Morgan at UBS in Sydney said.
"We're modestly bearish on copper for the fourth quarter. The driver for that is that there's a bit of supply surge that's happening in 2014 and 2015," he added.
Reflecting the outlook for improving supply, Newmont Mining Corp expects its idled Batu Hijau copper mine and mill in Indonesia to be fully operational six to eight weeks after it receives a promised export permit, Chief Executive Gary Goldberg said on Tuesday.
In other metals, tin closed at $21,150, down 0.1 percent, after hitting a 13-month low of $20,875 last week.
Tin prices will average $23,000-$24,000 a tonne this year, an official at Indonesia's top tin miner PT Timah said on Wednesday, with total output from the Southeast Asian nation seen 13 percent lower at a maximum 80,000 tonnes.
Elsewhere, aluminium closed at $1,999, down 1.3 percent, zinc ended at $2,268, down 0.5 percent and nickel was down 0.1 percent at $18,080. Lead, untraded at the close, was bid at $2,108, down 0.4 percent.
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