London copper futures rose on Tuesday on positive purchasing data from China and signs of recovery in US housing, catching up after a three-day weekend to gains made in Shanghai. But Shanghai gave up its early advances on worries prices have risen too fast, pulling London copper, nickel, lead and tin back from initial increases of 3 percent or more.
Copper for delivery in three months on the London Metal Exchange rose $65 to $4,665 by 0359 GMT, after earlier touching $4,750, its strongest since the middle of April. Traders said prices could challenge last month's six-month high of $4,925. Turnover was brisk 1,350 lots of LME copper trading in the first four hours of business two-thirds the typical turnover for the whole Asia trading day, while Shanghai volumes were also respectable.
"There is a massive amount of selling in Shanghai related to arbitrage and it's dragging down LME. Focus is very much on the physical market there was a big rise in prices yesterday which may have reversed today," a dealer in Shanghai said. Spot prices in Shanghai fell 100 yuan to 40,000 yuan, having gained around 7 percent on Monday.
Shanghai benchmark third month copper fell 0.9 percent or 330 yuan to 37,850 yuan by midday, after rallying by its 6 percent limit in the previous session. Prices earlier touched a two-week high of 38,900 yuan and traded as low as 37,560 yuan.
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