London - Copper prices edged higher on Thursday, lifted by a strong euro and better-than-expected US labour market data which painted an encouraging picture on the outlook for economic growth, but slow demand from top consumer China kept further gains in check.
Three-month copper on the London Metal Exchange rose to $7,720.50 a tonne at 12:45 SA time, up 0.4 percent from Wednesday's close of $7,690 a tonne.
Investors were encouraged by data on Wednesday that showed US private employers hired more workers than expected in February and demand for a range of factory goods was solid in January, seen as hopeful signs for the economy.
Investors are likely to pay close attention to US non farm payrolls data due on Friday, seen as a key labour market indicator for the world's largest economy.
“As far as the US is concerned there are clearly a lot of things that are positive,” said Nic Brown, head of commodity research at Natixis.
“The housing market is clearly improving and that will have a knock-on effect but equally the whole question of fiscal retrenchment will be a serious drag to growth for some to time.”
He added base metals were unlikely to show significant gains until the market gets clear signs of strong demand from top consumer China, where recent tighter measures for the property market have acted as a drag on copper prices.
Also helping lift prices was a rise in the euro against the dollar, which makes commodities priced in the US dollar cheaper for holders of other currencies.
Traders said the single currency could weaken if European Central Bank chief Mario Draghi hints at interest rate cuts at his press conference at 15:30 SA time.
REBOUND
Although copper has rebounded off three-month lows hit last week, prices are still trading 2.6 percent lower in the year to date after the metal used in power and construction shed more than 4 percent in February.
“We would expect copper buying (from China) to increase more strongly if prices reach closer to USD7,500/t, but there are signs of some traders buying on the dips,” ANZ analysts said in a note.
All eyes were on the outlook for demand from China, which accounts for 40 percent of global copper consumption, after consumption slowed last month ahead of the week-long Lunar New Year holiday.
“While the global environment is still hazy, markets appear to be betting on steadily improving growth,” said Thomas Lam, chief economist at DMG & Partners Securities in Hong Kong.
“It's steady as she goes for China,” he said, adding that the Lunar New Year effect weakened China's manufacturing figures early this year and these should not be taken as a signal of the scale of this year's copper demand.
China's new leadership meet this week and markets are closely watching their policy announcements for potential impact on metals demand.
So far these include allowing more flexibility in the yuan's exchange rate and prioritising urbanisation.
Tin rose to $23,525 from Wednesday's close of $23,470 and zinc climbed to $1,981.50 from $1,974.
Lead was at $2,189 from $2,192 , aluminium rose to $1,965 from $1,953, and nickel climbed to $16,580 from a last bid of $16,525 on Wednesday. - Reuters