MSN:METALS-Copper slips after two-day gains; Europe hopes support
SINGAPORE (Reuters) - London copper edged down on Tuesday after two sessions of gains although hopes that the euro zone would adopt fresh measures to shore up its faltering economy checked losses, while traders waited for a slew of data from top metals consumer China.
A seasonal slowdown in metal consumption due to holidays in the northern hemisphere has drained liquidity from a market already lacking confidence, with traders worried about the impact of a global economic slowdown on demand for the metal.
But Chinese industrial production, inflation and trade data later this week should paint a clearer picture on the extent China has been hit by softness in its export markets.
"Yesterday was mostly digesting last week's decent non-farm payrolls and the ECB (European Central Bank) comments. Today everyone is just waiting to see what is next," said commodities analyst Ivan Szpakowski at Credit Suisse in Singapore.
Investors maintained hope that Europe would take further action to tackle its debt crisis and that the United States and China would adopt stimulus measures to boost growth, helping shares in Asia stay steady on Tuesday and buttressing the euro against the dollar.
A weaker greenback makes dollar-based commodities cheaper for holders of other currencies.
Three-month copper on the London Metal Exchange had slipped 0.42 percent to $7,463.75 per tonne by 0708 GMT. Prices have shed almost 15 percent from the year's peak in February and are now down nearly 2 percent for the year.
The most-traded November copper contract on the Shanghai Futures Exchange was up 0.44 percent at 54,700 yuan ($8,600) per tonne.
Chinese industrial production and inflation figures are due Thursday, with trade data to be released Friday and new money supply data due any time between Aug 10-15.
PREMIUMS SLIP
Reflecting still sluggish demand from end users in China, premiums for physical metal have slipped, Citi noted in a report. "Chinese copper premia have ... come off, now at $65 a tonne having reached a high of $85 in early July," it said.
China's economy is facing downward pressure from shrinking external demand and a domestic property market downturn.
To spur growth, Beijing has followed a program of policy fine-tuning since the autumn of 2011, cutting interest rates, easing rules on bank lending, fast-tracking investment projects and cutting taxes and bureaucracy for businesses.
"In general we think August is going to be slow. We're looking for September to begin to see some signs of improvement in physical consumption of commodities like copper and steel due to a seasonal uptick, plus it will give more time for these stimulus measures to really go through," Szpakowski added.
China's central bank vowed on Sunday to step up its monetary policy fine-tuning in the second half to boost the economy, repeating assurances made last week by top leaders to counter a deceleration in growth.
In other metals, Indonesia's PT Timah has stopped selling tin on the spot market because of low market prices for the metal, cutting shipments this month from the world's largest tin exporter.
"I am sure tin prices will go up today ... The problem with the demand side is, if this news does kick in, it might take a few days to react, then that might just push tin prices up by $1,500-$2,000," a Singapore-based trader said.
"Then all of a sudden PT Timah will have tin again."
