LONDON: Copper hit a three-week low on Thursday as talks to avert a US fiscal crisis stalled, but losses were limited by belief that top metal consumer China's economy is making modest headway. China's economic growth regained momentum into early December, helping copper rally near 8 percent from mid-November, although momentum has since slowed. The political deal to narrow the budget deficit gap in Washington is needed to avoid a package of mandatory spending cuts and tax rises set for January that could throw the economy back into recession. No progress was made in talks on Wednesday. "In the past few days there were hopes that the politicians would find a solution to the dispute, but overnight the talks seem to have deteriorated," said Commerzbank analyst Daniel Briesemann. "So it looks like they won't resolve the issue before the end of the year and that's probably weighing on more cyclical commodities today." The tension was expected to rise later on Thursday when the Republican Party leadership plans to try to pass a bill of its own in Congress in a move which has already angered President Barack Obama. Three-month copper on the London Metal Exchange fell 1 percent to $7,845 a tonne by 1154 GMT from $7,926 at the close on Wednesday when the price fell more than 1 percent. Copper, which had rallied nearly 8 percent from mid-November to reach a near 2-month top at $8,162 on Dec. 12, has since lost almost half of those gains, hitting its lowest since Nov. 29 at $7,842.75 earlier in the session on Thursday. "Base metals have extended yesterday's losses this morning, due to concerns that fiscal cliff negotiations have deteriorated," RBC said in a research note. Copper has dipped below its 30, 100 and 200 day moving averages which have converged around $7,877/78, RBC said. The worries about the US crisis knocked US crude and spot gold, and world shares retreated from 17-month highs. US housing data also fuelled some concern about the recovery in the country's housing market. Construction is a significant market for copper with a little over 400lbs of the metal used in a typical US home. The Commerce Department said on Wednesday construction starts, or groundbreaking, fell 3 percent to 861,000 in November, although homebuilding permits touched their highest level in more than four years. Traders are awaiting direction from the fiscal talks and US economic data out later, including final third-quarter GDP, November existing home sales, and the Philadelphia Fed business activity index for December.

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