Copper up, helped by firm oil, China worries weigh

Copper steadied on Tuesday, supported by a softer dollar and firm oil, but prices are still within sight of recent lows brought about by a resurfacing of worries over demand growth in top consumer China. Oil prices touched a six-month high just below $50 a barrel. The US currency has slipped in recent days, making dollar-denominated commodities cheaper for non-US buyers.
Benchmark copper on the London Metal Exchange ended up 0.1 percent at $4,655 a tonne. The metal used in power and construction hit $4,594 on Friday, its lowest since February 25. Copper's woes have largely been a result of concern over China's economic outlook, with data showing factory output increased more slowly than expected in April and fixed-asset investment growth eased to 10.5 percent year on year in the four months to the end of April.
"The April data showed that the short-term rebound in economic activity in China has proved to be short-lived," said Commerzbank analyst Eugen Weinberg. "The credit numbers for April fell. I wouldn't be surprised to see further weakness in demand and prices."
Chinese banks reduced new lending sharply in April to 555.6 billion yuan ($85.2 billion). That was much lower than expected and less than half the 1.37 trillion yuan in March.
"There are signs that some of the recent optimism is receding and there is evidence of a slowdown in some of the order books of the Chinese copper fabricators, which is being repeated in Europe," Kingdom Futures said in a note. "If this continues there could well be another setback in metals prices generally, and the next month or two could see the markets testing the lows once again."
However, some cheer for industrial metals was provided by last week's news that China will invest about 4.7 trillion yuan in transport infrastructure projects over the next three years. In other metals, three-month aluminium fell 0.3 percent to $1,545 a tonne, zinc rose 0.2 percent to $1,904, lead was down 0.9 percent to $1,722, tin gained 0.3 percent to $16,960 and nickel added 0.9 percent to $8,800.