Shanghai copper rose 1 percent on Wednesday in the wake of a 4 percent rally in London futures in the previous session, but analysts were sceptical whether fundamentals would allow prices to move much higher.
Support for prices slipped after workers at Southern Copper voted to suspend a walkout scheduled for later on Wednesday. But a strike was still possible if a pay deal is not reached with the company. Some support was seen after the euro hit an all-time high against the dollar at $1.3880 on electronic trading platform EBS, on expectations of a Federal Reserve interest rate cut next week.
Investors are weighing the effect of a weaker greenback, which makes dollar-denominated assets cheaper for holders of other currencies, against the risk of a significant slowdown in the world's largest economy.
"The weaker dollar is exerting some upside pressure but all this can change if we get more bearish statistics on Thursday and Friday," MF Global analyst Edward Emir said.
Shanghai's most active November copper contract gained 700 yuan or 1.1 percent to 65,570 yuan ($8,717) a tonne at the close. Prices rose as much as 2.5 percent. "Shanghai copper could rise further and London futures might test the top of their recent range around $7,600, supported by more positive news from the United States," said analyst CIA Luoyi at China International Futures.
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