Copper rose on Monday, rebounding from three-month lows hit in the previous session, but gains were kept in check by a political stalemate in the United States and Italy, and by plans in top consumer China for tighter property sector controls. Three-month copper on the London Metal Exchange ended at $7,725 a tonne, up from Friday's close of $7,700, when it fell in intraday trade to its lowest in more than three months at $7,652 a tonne.
China, which accounts for 40 percent of refined copper demand, could increase required down payments and loan rates for buyers of second homes in cities where prices are rising too quickly, in its latest move to contain housing costs. Copper is used extensively for both wiring and building houses. Investors also had to contend with the aftermath of an inconclusive election in Italy that has cast doubt on the euro zone's austerity-led solution to its debt crisis, and with US spending cuts that threaten to dampen growth in the world's largest economy.
"There's awful lot of surprises this year and none of them good. Relative to original expectations (US spending cuts) could easily knock 1 to 1.5 percentage points off growth," said Nic Brown, head of commodities research at Natixis. In further pressure on copper, the dollar traded near a 2-1/2 month high versus the euro after euro zone sentiment tumbled in March. A strong dollar makes dollar-priced metals costlier for European and other non-US investors.
Also weighing, data on Sunday showed growth in China's services sector expanded at its slowest pace in five months in February. Last week, meanwhile, data showed China's factory growth cooled to multi-month lows in February. Copper shed more than 4 percent in February to more than erase gains for the year. It is trading 2.5 percent lower on the year to date.
"We think the technicals in base metals continue to look poor, and we likely will push lower over the next two weeks before recovering by the second half," said Ed Meir, analyst at INTL FCStone. Property sector curbs and slowing factory growth China have dented sentiment towards metals, said Judy Zhu, an analyst at Standard Chartered in Shanghai.
"But what I see and hear in the copper market is that consumption is now improving seasonally," she said. Latest LME stock data, however, brought further headwinds for copper bulls, showing stocks up at 462,400 tonnes, the highest since early October 2011, and amounting to a rise of around 200,000 tonnes since early December.
Also, ShFE copper stocks surged by 18,492 tonnes, or 8.9 percent, data on Friday showed. "The technical picture continues to look poor and many model based traders are now getting themselves short in base metals," said RBC Capital in a client note. In other metals traded, soldering material tin ended at $23,375 from Friday's close of $23,250, while zinc, used in galvanising, ended at $2,002 from $2,021, having earlier hit a month and a half low of $1,995 a tonne.
Battery material lead closed at $2,216 from Friday's close of $2,244, earlier falling to its lowest since early December at $2,213 a tonne. Aluminium ended at $1,974 from $1,975, while stainless-steel ingredient nickel closed at $16,450 from $16,605.