Copper nudged higher on Wednesday, buoyed by a weaker dollar and firmer equities while poor U.S and Japanese data stoked economic and demand concerns to cap greater gains.
At 1417 GMT, three-month copper on the London Metal Exchange traded at $4,635 a tonne versus Tuesday's closing price of $,4550 and off a day's high of $4,651.
"Looks like the dollar has got weaker. That is pretty much all there is around at the moment to explain copper's jump," said Michael Khosrowpour, an analyst at Triland Metals.
"Every time we see copper dip off, it comes back again. I'm tired of being bear... There is (also) a connection with equities, which helps with the sentiment generally."
The dollar hit its lowest level in more than four months against a basket of major currencies. A weak U.S. currency makes metals priced in dollars less expensive for holders of other currencies.
Choppy European shares turned positive, while Wall Street also rose, on investor optimism about growth.
The macro picture was less clear however. Japan's economy shrank at a record pace in the first quarter.
"This was another reminder ... that we are not out of the woods yet and that, despite robust interest from China, the global economy is very far from a full recovery," VTB Capital said in a note.
ALUMINIUM STOCKS
A fresh fall in stocks of copper, used extensively in the power and construction industries, helped offset some demand concerns, with stocks down 7,350 tonnes to 341,475 tonnes.
However, cancelled warrants -- material earmarked for delivery -- fell, raising questions about buying by China, the world's largest consumer of copper.
Investors now fear Chinese demand, that has helped copper to double in value so far this year, was merely government and consumer stockpiling that is now starting to subside.
The material tagged for delivery stood at 50,325 tonnes -- about 15 percent of total LME copper stocks -- compared with 57,700 tonnes on May 18.
Highlighting the lack of demand which has dogged industrial metal in recent months, the global copper market was in a surplus of 187,000 tonnes in January-March.
Aluminium traded at $1,501 tonne from $1,500, with prices restrained by an over-supplied market that saw inventories march higher yet again, up by 81,075 tonnes to strike a record above 4.1 million tonnes.
The metal used in transport and packaging hit a session low of $1,474, its lowest since the end of April.
Zinc was at $1,500.25 from $1,526 and battery material lead traded at $1,470 from $1,485. Helping to buoy prices, latest data shows a dominant position is controlling 80-90 percent of cash warrants on LME stocks of lead.
Tin was $125 higher at $13,750.
Worries about a supply squeeze were reflected in the $190 a tonne premium for cash material over the three-month contract. But that was expected to fall as a dominant position, which has recently controlled up to 90 percent of cash warrants on LME stocks, has slipped to between 40 and 50 percent.
Nickel traded at $12,650 from $12,465.
Cancelled warrants of nickel stood at 4,530 tonnes -- just over 4 percent of total LME stocks which dropped by 114 tonnes to 109,674 tonnes. One trader in Europe said that due to healthy Chinese demand his company had tagged for delivery about 4,500 tonnes of about 15,000 tonnes of nickel stocks in Singapore.
"Chinese demand is still very good. Scrap is tight and imports from China are high," the trader said.
