SINGAPORE: Copper futures edged higher on Wednesday as a cut to record-low US interest rates by the Federal Reserve sent the dollar reeling, but worries about the world economic picture kept gains in check. The U.S. Federal Reserve on Tuesday breached uncharted territory by chopping benchmark interest rates to a target range of zero to 0.25 per cent from 1.0 per cent, and said it was willing to keep rates low for an extended period. The cut sent the euro soaring to almost $1.42 on Wednesday but only bumped up copper prices by a few dollars after the previous session's 3 per cent drop to test psychological support at $3,000. "The Fed really put the pedal to the metal on rates and the dollar tumbled, but the commodities response has been fairly limited," MF Global analyst Edward Meir said. "There is a tug of war going on - the soft dollar pulls prices up, but macro weakness pulls them lower. I am throwing my lot in with the macro side, and think prices will remain weak." London Metal Exchange copper rose 0.75 per cent or $23 to $3,100 a tonne by 0702 GMT. "The limited response to the Fed move reflects how negative sentiment is towards industrial commodities," said Barclays Capital analyst Yingxi Yu. "There are no convincing signs of a near-term turning point and it will be very difficult for these markets to stage any recovery in the next few months." One piece of data analysts will look at in the next few months is US housing starts. Overnight, US new home starts slumped to a new low in November. "The US housing market was one of the first areas to weaken and we will need to see signs of improvement there before commodity markets recover," Yu said. Shanghai copper futures closed down 90 yuan at 23,710 yuan ($3,468) a tonne, after falling by their 4 per cent limit on Tuesday. Shanghai aluminium rose by 1.8 per cent to 10,585 yuan after it too slid by its 4 per cent maximum in the previous session, while LME metal rose $15 to $1,485.

Source