London - Copper fell on Tuesday due to lingering concerns about a tapering of US monetary stimulus and falls in emerging market equities, although signs of economic improvement in China underpinned prices.
The economy of the world's top metals consumer is showing clear signs of stabilisation, helped by policy support and some improvement in global demand, and is on track to meet the official 2013 growth target of 7.5 percent, the government said.
In the wider markets, European and Asian equities fell on fears of possible military action against Syria after US comments holding Syrian President Bashar al-Assad responsible for using chemical weapons against civilians.
Benchmark three-month copper on the London Metal Exchange fell 1.05 percent to $7,283 a tonne by 11:21 SA time from the previous session on Friday.
London markets were closed on Monday for a bank holiday.
“Copper is correlated with emerging market equities, (where) there are fears that as the Fed gets closer to tapering off quantitative easing, markets with the weakest fundamentals will see outflows of hot money,” said Gianclaudio Torlizzi of metals consultancy T-Commodity.
He added, however: “Copper has found strong support thanks to China's stabilisation. The (emerging market) selloff has been excessive. I would take today's weakness as a buying opportunity.”
Copper fell last week for the first week in four as a rebound spluttered following an emerging market selloff.
Copper has risen 11 percent from a three-year trough touched in late June but is still down around 7 percent this year.
In the United States, recent data on durable goods, single family home sales and business spending on capital goods have been disappointing, muddling the outlook for when the Federal Reserve may curb its quantitative easing programme.
Also, the Obama administration warned Congress on Monday that the United States could run out of money to pay its bills soon after mid-October if lawmakers do not move swiftly to raise the limit on government borrowing.
Last week, however, investors also were treated to upbeat manufacturing numbers from the United States and more importantly China, which accounts for about 40 percent of global copper demand.
“Chinese demand has recovered, in part by restocking, (but) end-demand has also improved,” Barclays Capital said in a note.
“Our economists still expect (Chinese) growth (to be) weaker by year-end. Although prices could run further to the upside in the short term, we favour selling into this strength to position for lower prices later in the year,” it added. - Reuters