Reuters reported that London copper peeked above 4 month lows on short covering and signs that Greeks are warming to pro-austerity parties, allaying some fears the country could leave the euro zone. Still, worries about Spain's finances and reports of Chinese copper inflows onto the London Metal Exchange will likely cap gains in the session. Three month LME copper inched up USD 1 to USD 7,650 per tonne by 0712 GMT after closing almost flat in the previous session. It is on track to post a weekly drop of 4.6% its third consecutive week of losses. The most active August copper contract on the Shanghai Futures Exchange fell 0.4% to close at CNY 55,520 per tonne, a partial rebound after a steeper fall at the open. The Shanghai contract rose 1.9% on Thursday, much more than its London counterpart after diving on Wednesday to its cheapest since December 20th 2012. Compared with last week, it fell 3.4% its third consecutive weekly loss. A Shanghai based trader with an international firm said that "LME copper started rising after bouts of short-covering on the ShFE. I think this triggered the metal's upward momentum and helped lift London prices. London copper is also tracking the rise of base metals like aluminium, zinc and lead, which started floating higher since yesterday. Those metals are trading closer to their marginal production cost than copper, so they have rebounded faster. Copper prices may also have been weighed down this week by a hefty inflow into LME warehouses from China. China's smelters and merchants may have added around 110,000 tonnes to LME warehouses in South Korea. The exports came just two weeks after the trading unit of Jiangxi Copper Company Limited said that a group of copper smelters as well as trading firms would export refined copper cathodes to LME to help ease tight global supplies and trim near record stockpiles at home. Regarding the euro zone, a poll showing Greek voters returning to pro bailout parties helped improve sentiment ahead of a snap election in Greece next month, which many still fear could empower anti austerity leftists and prompt Greece to quit the euro. Separately, a German Bundesbank board member said that euro zone banks are in better shape than before the financial crisis and that those in Germany are equipped to cope with Greece taking a turn for the worse. Analysts said that any price gains in the session will be fragile in light of China's soft downstream demand and high stockpiles, as well as the debt issues clouding the euro zone. In the longer term, copper is weighed down by still lacklustre demand and still high stockpiles in China Mr Zhang Ao analyst of Minmetals Futures said that many smelters are losing money and while ShFE inventories have pared over the past few weeks, stocks are still higher than they have been over the past few years. But the next turning point for copper prices, either a decisive rise or fall will really be determined by macroeconomic events, especially from the euro zone.

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