NEW YORK (Dow Jones)--Copper futures rose slightly Tuesday as trader sentiment was mixed following the Independence Day holiday.
U.S. participants returned to trading as concerns about China's economy weighed on the market, and copper rose along with oil and gold.
The most actively traded contract, for September delivery, was recently up 0.7 cent, or 0.16%, at $4.3095 a pound on the Comex division of the New York Mercantile Exchange.
Thinly-traded July-delivery copper was up 0.65 cent, or 0.15%, at $4.2985 a pound.
Moody's Investors Service said Tuesday that a Chinese government agency may have understated banks' loans to local governments by about $541 billion, which could cause the ratings agency to change its credit outlook for the Chinese banking system to negative.
Inflation remains high in China, the largest consumer of copper. The People's Bank of China said Monday the country will keep a prudent monetary policy, but there are concerns that China may increase interest rates.
China has tightened credit measures in an effort to curb inflation, but this has slowed the boom in the construction and manufacturing sectors and curbed the demand for copper in those industries.
"There's speculation that China will not continue to tighten here in the future," said Matthew Zeman, head of trading at Kingsview Financial.
This tightening had been negative for commodities, Zeman said, and the market is trying to decide whether China's action is a positive or negative sign.
There are also thoughts that Chinese inventories of the metal are low, and that China may need to restock, said Frank Lesh, a broker with FuturePath Trading in Chicago.
"The market's looking for a catalyst at this point," Zeman said, noting that the price for copper has held above the $4 level but could go lower without something to push prices higher.
Meanwhile, data on May factor orders is expected at 10 a.m. EDT.
-By Amy D'Onofrio, Dow Jones Newswires; 212-416-3209; amy.d'onofrio@dowjones.com
