(Reuters) - Copper fell for a fourth consecutive session on Monday amid nagging worries about the global economic outlook, but losses were limited by hopes that the spate of disappointing economic data around the world last week would spur governments to roll out more stimulus measures.
Thin LME copper trading volumes show that many investors are playing it safe by closing down positions and are likely to stay on the sidelines, looking for fresh trading cues from another raft of economic data due this week, including U.S. retail sales and consumer prices and the euro zone's gross domestic product.
Further pressuring prices was a weak Chinese physical copper market, which in July saw a 6.8 percent fall in output in from a month earlier to 483,000 tonnes, official data showed on Monday, as large stockpiles and weak demand prompted smelters to lower production.
Three-month copper on the London Metal Exchange had fallen 0.6 percent to $7,444.50 per tonne by 0720 GMT in thin trading, extending Friday's loss of 0.6 percent.
The most active November copper contract on the Shanghai Futures Exchange dropped 0.3 percent to 54,440 yuan ($8,600) per tonne, dragged down in afternoon trading by weak Shanghai equities .SSEC that suffered their worst daily loss in nearly a month.
"Copper prices were already under pressure from a recent spate of weak China data, which have not resulted in further government stimulus as many expected," said Orient Futures derivatives director Andy Du. "On top of bearish sentiment, Shanghai November copper prices are also weighed down by investors closing their positions and moving these to December."
A Shanghai-based trader with an international firm noted a lack of support from Chinese copper bargain hunters, who usually do some limited restocking when prices dip.
"... probably because many have already done their shopping during earlier dips," he said.
However, the prospect of more stimulus action by the Chinese government in the wake of recent sluggish data is one cause for optimism in an otherwise gloomy market.
"Market opinions of the outlook for base metals are divergent with some believing the LME copper price is headed towards $6,500, while others are hopeful Beijing or Washington will announce new stimulus measures soon and thus spur a rebound from current price levels," the trader said.
Data released by China on August 10 helped raise hopes for more stimulus after it showed exports in July rose just 1 percent from a year earlier and new loans were at a 10-month low, suggesting that pro-growth policies have been insufficient and more urgent action may be needed to stabilize the economy.
Adding to the gloomy global growth picture, Japan's economic expansion slowed more than expected in the second quarter as a rebound in consumer spending started to lose momentum and Europe's debt crisis weighed on global demand.
In the euro zone, squabbling between bloc members over whether the European Central Bank should buy Spanish and Italian sovereign bonds as a means to ease the debt crisis also kept markets on edge, with Finland's prime minister saying he was critically opposed to such a move.
ALUMINIUM EXPORTS TO RISE
China's exports some of finished aluminum products are expected to rise in August, slightly boosting aluminum ingot demand.
But this should not be taken as sign that global aluminum demand has picked up as these exporters are selling at thin and sometimes even negative profit margins due to the unfavorable price arbitrage, consultancy Shanghai Metals Market said in a recent note.
Chinese aluminum foil producers are selling into the Middle East and North America markets to avoid a complete shutdown of their plants.
"This will cause production of aluminum foil to spike in August," SMM added.
