LONDON (Reuters) - Copper edged up on Thursday as investors grew more hopeful that recent financial data could spur growth-supporting measures that would boost global demand, with a strong euro helping gains after U.S. data pointed to signs of a recovering labor market.
Expectations for economic stimulus in China grew after Premier Wen Jiabao said the country, the world's top consumer of refined copper, still faced headwinds despite cooling inflation.
Those expectations got another boost after China's Commerce Ministry said foreign direct investment had fallen for January-July versus a year earlier and that the trade outlook for 2012 was worsening.
Three-month copper on the London Metal Exchange rose to $7,421.50 a tonne at 1330 GMT, up 0.5 percent from $7,385.50 at the close on Wednesday.
A rise in the euro versus the dollar helped gains. This came after data showing the number of Americans filing new claims for unemployment benefits edged higher last week although a trend reading fell close to a four-year low, pointing to ongoing healing in the labor market.
A weak dollar makes commodities priced in the U.S. currency unit cheaper for holders of other currencies.
"The latest uptick in copper is due to the data from the U.S. and a somewhat weaker U.S. dollar that is giving support to prices," said Daniel Briesemann, analyst at Commerzbank.
"But the recent ranges will likely hold as I don't see any indicators that could push copper outside of its current trading range."
Copper has lost around 27 percent from last February's record level of $10,190 a tonne and has been stuck in a trading range of between $7,300 and $7,600 since July 20.
David Wilson, analyst at Citi, said the market was firmer on expectations that there will be easing measures from China, but said rising food inflation would remove some of the scope for significant easing and that the political timing was sensitive, with a new premier set to take over in April.
Sluggish U.S. growth in the second quarter, undermined by the euro zone crisis, has also raised hopes the U.S. Federal Reserve will take further quantitative easing (QE) steps.
But recent U.S. data has pointed to a recovery in the third quarter, dimming prospects of further QE.
"Trying to bet on the outcome of policy decision-making is difficult. Over the last few times there have been Fed meetings, there has been a slight run-up in (metals) prices on hopes for QE, only to be disappointed," Wilson said.
"I think we're going to be set for the same again."
Officials at the Fed are due to meet on September 12-13, and a speech by Chairman Ben Bernanke at the central bank's high-profile gathering in Jackson Hole, Wyoming, in late August could offer clues on the near-term course of monetary policy.
BUCKING THE TREND
Zinc, used to galvanize steel, bucked the slightly firmer tone in the base metals market.
Benchmark LME zinc fell to $1,795 from $1,802 at the close on Wednesday, victimized by overproduction and weak demand. China's steel association said steel prices would remain weak in the coming months due to a supply glut.
LME data also showed 22,700 tonnes of zinc being delivered into Johor in Malaysia, but traders said this was common near the LME's prompt date on the third Wednesday of the month.
In aluminium, technical charts pointed to downward pressure for prices despite talk of production closures and steady physical premiums, particularly in China, investment bank RBC Capital Markets said in a note.
Three-month aluminium was at $1,838.25 from $1,839 at Wednesday's close.
"The market looks vulnerable," ANZ said. "Downside support is around $1,830 and we see risks of a failure and slide to below $1,800 in the oversupplied market."
LME aluminium is down by more than a fifth from a year high in March, prompting Chinese manufacturing plants and merchants to increase purchases of spot primary aluminium.
Lead was at $1,845.75 from $1,823 and nickel was at $15,322 from $15,300. Tin was at $18,050 from $18,000.
(Additional reporting by Carrie Ho in Shanghai, editing by Jane Baird and Nina Chestney)
