LONDON: Copper edged lower on Tuesday as the dollar strengthened, but a healthy demand outlook after the announcement of a successful coronavirus vaccine is expected to push prices back above Monday's 29-month high.
European stock markets and oil prices rose for a second day, though weak inflation data in China, the biggest metals consumer, dragged down equities there.
The dollar, meanwhile, recouped some of Monday's losses, pressuring metals by making them more expensive for buyers with other currencies.
Benchmark three-month copper on the London Metal Exchange (LME) was down 0.3% at $6,895.50 a tonne at 1201 GMT after touching $7,054 on Monday, the highest since June 2018.
Prices of the metal used in power and construction should move above $7,000 over the coming months as the dollar weakens and optimism builds that the coronavirus will be contained, said ING analyst Wenyu Yao.
"Looking at the fundamentals, there is clearly after this pandemic a speed up of the pivot to renewable energy and decarbonisation, which is good for copper demand," she said.
VACCINE: Pfizer Inc's experimental COVID-19 vaccine is more than 90% effective based on initial trial results, the drugmaker said on Monday.
However, Brazil suspended a clinical trial for China's Sinovac coronavirus vaccine, one of the world's front-runners, citing a severe adverse event.
CHINA: China's factory-gate prices fell at a sharper-than-expected pace in October, a sign of economic weakness that contrasts with brisk growth in exports and manufacturing activity.
POSITIONING: Speculators are betting on higher copper prices, with a net long on the LME equivalent to 6.3% of active contracts as of Thursday, brokers Marex Spectron said.
CHINA OUTPUT: Copper cathode output at China's biggest copper smelters fell by 5.4% year-on-year in October due to maintenance at two major plants, researchers Antaike said.
COLUMN: China's copper import boom leaves other metals cold, writes Andy Home.
OTHER METALS: LME aluminium was up 0.5% at $1,903.50 a tonne, zinc was down 0.2% at $2,637, nickel rose 0.2% to $15,785, lead gained 0.1% to $1,835.50 and tin was 0.1% higher at $18,300.