Reuters reported that London copper edged down after rising for two weeks in a row although signs of economic recovery in top consumer China and hopes for Greece to avert an imminent bankruptcy kept a floor under prices.
Copper prices have found their feet this month after evidence that China's manufacturing sector bottomed in October was followed by a factory survey that signaled economic growth had revived after seven consecutive quarters of slowdown.
A factory survey showed that China's vast manufacturing sector saw expansion accelerate in November for the first time in 13 months. Consumers will be watching China's official purchasing manufacturers' index due at the end of the week for further confirmation of the trend.
Mr Wan Ling Beijing based metals analyst of commodities research house CRU Group said that "We think metals prices will continue rangebound for the rest of the year. A positive PMI number should help a little bit but we have not seen any significant improvement in the real economy yet."
China accounted for 40% of global copper consumption last year but with anaemic demand growth this year due to a slowdown in export markets its inventories have climbed. Copper stocks in bonded warehouses hit a record high of more than 1 million tonnes this month.
Three month copper on the London Metal Exchange slipped 0.27% to USD 7,756.25 per tonne by 0328 GMT, snapping two straight days of gains. Prices have climbed almost 3% over the last 2 weeks.
LME copper rallied more than 7% in September on US and European easing measures bringing the year's gains to more than 10% at the time but prices have since dropped on high stockpiles and tepid demand growth in China. The most traded March copper contract on the Shanghai Futures Exchange was little changed at CNY 56,110 per tonne.
Asian shares rose on Monday on hopes Greece could avoid a near term bankruptcy but a regional Spanish vote favoring separatist parties clouded Madrid's push for fiscal austerity. The euro started the week near one month highs against the dollar, having staged an impressive rally on Greek hopes on Friday adding support to metals.
Greece's finance minister said that the International Monetary Fund has relaxed its debt cutting target for Greece and only EUR 10 billion gap remains to be paid.
European Union leaders failed to reach agreement on Friday on a new 7 year budget for their troubled bloc, calling off talks in less than 2 days after most countries balked at far deeper spending cuts demanded by Britain and its allies.
Separatists in Spain's Catalonia won regional elections on but failed to get the resounding mandate they need to push convincingly for a referendum on independence. The separatists' win could raise concerns about the negative impact to the Spanish economy and its fiscal conditions, as Catalonia accounts for 20% of the economy and provides the most tax revenue to the central government.
Deutsche Bank said that "The complex is starting to show some signs of life and there is the potential that current levels could represent a multi quarter low. Certainly trading volumes are poor as many traders sit on the sidelines, however, this could change quickly early in the new year as more compelling evidence of a Chinese upturn and fiscal stimulus package emerge."
