Shanghai Futures Exchange copper also cut loses to close down 0.4 percent at 35,960 yuan ($5,499) a tonne on Tuesday as expectations grew that China would have to boost stimulus to shore up its economy after data showed a slowdown in factory activity last month.
Other metals were mixed with aluminium losing 1.1 percent, but zinc and nickel ended in positive territory. Copper prices will also be underpinned by a drop in Chilean output. The world's top copper producer slashed supply by almost 14 percent from a year earlier in January, the clearest sign yet that miners' spending cuts amid a year-long market rout have started to curb supplies.
But for now, an amply stocked China is keeping a lid on copper prices. Shanghai stockpiles are near record highs, while copper premiums have dropped to $87.50 a tonne from as high as $100 last week. China's manufacturing activity shrank for the seventh month in a row and more sharply than expected in February, an official survey showed, while another gauge showed factories in the country shed jobs at the fastest rate in seven years.
The weaker tone was echoed in manufacturing surveys across Asia, showing that China's slowing economy was rippling through the region. But with emerging evidence that China's supportive measures were filtering into its property market, improving the outlook for demand, and supply cuts emerging due to low prices, some analysts see the market finding a floor.
"It's a short term reaction - copper will come back fast and furious," said Jonathan Barratt, chief investment officer of Ayers Alliance in Sydney. "Also the dollar is stronger and commodities are strong, that tells you underlying demand is solid."
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