Copper prices stayed near three-week highs on Wednesday on hopes that renewed talks between China and the United States will defuse a trade dispute that investors fear will damage economic growth and metals demand.
Benchmark copper on the London Metal Exchange (LME) pulled back slightly but kept most of the previous session's gains. It ended 0.5% lower at $5,918 a tonne after adding 1.8% on Tuesday.
Worsening confrontation between Washington and Beijing had helped drive copper prices from a high of $6,608.50 in April to a low of $5,740 on June 7.
News that talks will be revived ahead of a meeting next week between Presidents Donald Trump and Xi Jinping "helped bring copper back from the brink," Saxo Bank analyst Ole Hansen said.
But prices were unlikely to recover strongly without real progress in the talks, he said.
Copper was also helped by expectations that the United States and the euro zone may deliver interest rate cuts as early as July.
Investors wagered the Federal Reserve would follow the lead of the European Central Bank and open the door to future rate cuts at its policy meeting later on Wednesday.
In a sign of the influence of the US-China trade war, confidence among Asian companies in the June quarter fell to its lowest since the 2008-09 financial crisis, a Thomson Reuters/INSEAD survey found.
China's central bank said it would sell 30 billion yuan ($4.35 billion) worth of yuan-denominated bills in Hong Kong on June 26, a move expected to support the currency.
A sharp weakening of the yuan since April has made metals more expensive for buyers there.
Unions at Chile's Codelco on Wednesday evening will discuss an improved contract offer that the world's largest copper producer hopes will bring an end to a strike at its huge Chuquicamata deposit, now entering its sixth day.
Disruption at Chuquicamata could further tighten the copper concentrate market after Chinese treatment charges fell by around a third this year, pointing to short supply, analysts at ING said.
The roughly 24 million tonne a year copper market will see a deficit of 362,000 tonnes this year, according to Bank of America-Merrill Lynch. A deficit should support prices.
On-warrant lead stocks in LME-registered warehouses fell to 49,175 tonnes after 15,025 tonnes of fresh cancellations, sending levels back towards 10-year lows of just over 40,000 tonnes seen in January.
Congo's military has deployed hundreds of soldiers to protect a major copper and cobalt mine owned by China Molybdenum Co Ltd from illegal miners, an army spokesman said.
LME lead was down 1.3% at $1,894 a tonne, aluminium was 0.3% higher at $1,783, zinc fell 1.3% to $2,478, tin finished 1.4% lower at $18,900 and nickel ended at $12,090 a tonne.
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