SINGAPORE: Copper drifted lower on Thursday on worries over a worsening outlook for Europe's economy and slowing growth in China, although signals that recovery could be taking hold in the United States kept losses in check.
Traders are now eyeing a European Central Bank meeting later in the day and Friday's key US non-farm payrolls report for direction in trade thinned by a week-long national holiday in China.
"The market is in a tug of war between macro signals -- quantitative easing in the West, developments in the euro zone -- and the physical market which is going to carry on disappointing," said James Luke, a Hong Kong-based commodities analyst at China International Capital Corporation (CICC).
"Overall we expect Q4 prices to continue to take cues from the macro rather than the physical market. Prices will be well supported but I don't expect physical demand to surprise on the upside and that should limit (prices) relative to other more purely investor-driven metals such as gold."
Three-month copper on the London Metal Exchange had edged down to $8,274 a tonne by 0330 GMT, easing 0.19 percent from the previous session, when it slipped nearly half a percent to snap four sessions of gains.
Prices rallied nearly 8 percent last month, reaching a 4-1/2 month high of $8,422 a tonne on Sept 19.
Shanghai Futures Exchange markets are shut this week due to the holiday in China.
The euro zone's economic woes accelerated last month and China's slowdown looked likely to extend to a seventh quarter, surveys showed on Wednesday, while the US provided a bright spot with better-than-expected news on services and jobs.
US companies added more jobs than expected in September, while activity in the vast services sector picked up, suggesting the economy remained on track for modest growth, ahead of September's jobs figures on Friday.
Growth in the United States has been stronger than elsewhere, although the world's top economy remains burdened with high unemployment and uncertainty about taxes and government spending next year.
"We think the slant of the market after the payroll numbers on Friday will really be the action one should pay attention to. For now look at continued back and forth as the market consolidates terrific gains made since August," RBC Capital said in a note.
In Asia, the safe-haven dollar eased after the positive US data, easing pressure on metals. A stronger dollar makes commodities more expensive for holders of other currencies.
LOWER PREMIUM
Pan Pacific Copper Co Japan's biggest copper smelter, is offering a term copper premium of $85 per tonne for clients in China for 2013 shipments, down from $100 in 2012, a source familiar with the matter said.
The lower premiums reflect slowing demand growth in the world's top consumer of metals, which accounted for 40 percent of appetite last year.
Elsewhere, a private equity firm founded by Chinese billionaire Yu Yong and a fund backed by state-owned China Development Bank have offered to buy Australian-listed copper explorer Discovery Metals Ltd, valuing the company at about $850 million.
The takeover offer for Discovery is the latest in a series of small-to-mid-sized metals and mining deals to hit Asia in the wake of sliding commodity prices, flagging a series of asset sales and sector consolidation.
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