By Matt Day Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Copper futures rebounded from two-week lows Tuesday as better-than-expected Chinese industrial production data outweighed the drag from further monetary tightening by the world's largest metals consumer. The most actively traded contract, for July delivery, was recently up 8.4 cents, or 2.1%, at $4.1185 a pound on the Comex division of the New York Mercantile Exchange. The contract Monday had ended at its lowest price in more than two weeks. Copper's rise Tuesday came as industrial production in the world's largest metals consumer came in better-than-expected. Chinese industrial production in May rose 13.3% from year-ago levels, higher than the 13.2% rise expected by economists and an indication that the country's appetite for industrial metals may hold steady. The report "did not show the feared sharp slump of China's economy," commodities analysts with Commerzbank said in research note, boosting sentiment among copper traders. Chinese officials have taken steps to try to limit inflation for much of the last year, raising the amount of cash banks must keep in reserve and raising interest rates. The trend continued Tuesday, as the People's Bank of China responded to a report that the consumer price index in May was up 5.5% from a year earlier by increasing bank reserve requirements by half a percentage point, the sixth increase this year. The change takes effect Monday. But the move didn't come as a surprise to the copper market, which has been under pressure for much of this year as market participants bet the anti-inflation push would damp Chinese copper demand. China is the world's largest copper consumer, and its demand for the metal for construction and manufacturing was a driving force behind copper's rise to record highs above $4.60 a pound in February. Market participants said copper may come under pressure, however, from continued worries about the ability of the European Union to manage member countries' sovereign debt and signs of stumbling U.S. growth. The metal is sensitive to changes in the economic outlook because of its widespread use in construction and is viewed by some investors as an industrial bellwether. Also Tuesday, Chile's state-controlled Corporacion Nacional del Cobre said that its El Teniente mine was operating at 73% of capacity as the facility continues to work at a slower pace after workers' protests turned violent in recent weeks. El Teniente is the world's largest underground copper mine, and produces about 400,000 tons of copper a year. Benchmark copper on the Shanghai Futures Exchange ended higher Tuesday, as traders viewed the set of largely as-expected economic reports as an excuse to buy copper at a discount to the high prices seen earlier this year. -By Matt Day, Dow Jones Newswires; 212-416-4986; matt.day@dowjones.com

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