Copper rose on Monday as investors' focus returned to supply risks in Chile and Indonesia, though gains were capped by last week's surprise economic policy tightening in top consumer China. The Chinese central bank caught financial markets off guard on Friday by raising short-term interest rates on the first day back from a long holiday in a further sign of policy tightening as the economy shows signs of steadying.
On the supply side, workers at BHP Billiton's Escondida copper mine in Chile, the world's biggest, prepared to re-enter dialogue with the company on Friday after BHP asked for government mediation to try to avoid a strike.
Meanwhile, the world's biggest publicly listed copper miner Freeport-McMoRan Inc said it would cut staff, spending and production in Indonesia if it did not get a new export permit by mid-February.
"Chile and Indonesia (risks) might be priced in for now, but ... if there ends up being a strike, that's going to create further tightness in copper," said Investec mining analyst Hunter Hillcoat.
"We think copper will sustain gains last year into 2017. It's basically a supply story."
Three-month copper on the London Metal Exchange ended up 1.3 percent at $5,847 a tonne. The metal lost 1.9 percent on Friday in its biggest daily fall since Dec. 19 on worries over Chinese policy tightening.
Concerns about kinks in mine supply have helped to turn speculators positive towards copper.
Hedge funds and money managers increased their net long position in COMEX copper contracts to a record high level in the week to Jan. 31, US regulatory data showed.
Latest global economic readings were upbeat. China's January business survey showed activity expanding at a healthy clip while German new industrial orders surged 5.2 percent in December - their biggest December gain in eight years.
Markets are, however, caught between strong economic data and political uncertainty associated with US President Donald Trump's administration.
Nickel ended up 2.2 percent at $10,450 a tonne.
Philippine Environment and Natural Resources Secretary Regina Lopez said on Monday that she will not reconsider her decision to shut down 23 of the country's 41 mines, adding that the Southeast Asian nation is "unfit for mining".
Zinc, used to galvanise steel, closed 0.1 percent down at $2,792, hurt by the rise in China's interest rates that spurred a sell-off in ferrous metals.
Lead ended up 1 percent at $2,348, tin was down 2.8 percent at $19,220, having earlier hit its lowest since last September at $19,100, while aluminium finished 0.1 percent down at $1,834.