LONDON: Copper prices bounced on Friday after data showed US inflation was steady, giving more confidence that the Federal Reserve may cut interest rates this year and weighing on the dollar.

Earlier, weak manufacturing data in top metals consumer China weighed on copper prices. Three-month copper on the London Metal Exchange was up 0.3% to $10,164 a metric ton at 1330 GMT, having slipped nearly 9% since touching a record high of $11,104.50 on May 20.

Copper moved into positive territory after data showed the US core personal consumption expenditures price index, which the Fed uses to gauge underlying price pressures, rose in line with expectations. That spurred traders to increase bets that the Fed would deliver a rate cut in September and pushed down the dollar index, making commodities priced in the US currency less expensive for buyers using other currencies.

“If the number had come in hotter than expected, the market may have pushed out forecasts for rate cuts, possibly to 2025,” said WisdomTree commodity strategist Nitesh Shah.

Earlier, China’s manufacturing activity fell unexpectedly in May as a protracted property crisis in the world’s second-largest economy continued to weigh on business, consumer and investor confidence. The official manufacturing purchasing managers’ index (PMI) dropped to 49.5 in May from 50.4 in April, below the 50 mark that separates growth from contraction.

“The Chinese numbers, being so soft and coming in below 50, might be something that make people reassess their demand forecasts from China,” Shah said. Despite recent losses, LME copper has gained nearly 2% this month and about 19% this year.

Copper’s rally was fuelled by speculators and a short squeeze on the US Comex exchange that sent prices to a premium of about $1,000 over LME levels.

Comex prices have declined more than LME prices in recent days, narrowing the gap to about $180 a ton. June copper futures were down 0.5% to $4.65 a lb.

In other metals, LME aluminium rose 0.8% to $2,724 a ton, nickel added 0.6% to $20,185, lead gained 1% to $2,299 and tin climbed 1.7% to $33,675, while zinc shed 0.4% to $3,058.50.