London/Singapore - Copper slipped from two-week highs on Thursday under pressure from a stronger dollar and as traders took to the sidelines ahead of a key US jobs report.
The dollar rose against the euro, with the single currency seen vulnerable before a European Central Bank meeting where President Mario Draghi is likely to point to a weak euro zone economy and may hint it needs more help.
A strong dollar makes dollar-priced metals more costly for non-US investors.
Copper prices have rebounded around five percent from three year lows touched last week as China's buyers rushed to secure stock, sending premiums to record levels and sparking talk of increased Chinese copper imports.
But the market remains on guard after a slew of weak macro data from China, the world's top copper consumer.
“I'm not entirely convinced the rise in (Chinese copper) premiums is based on fundamentals, it's a lot to do with financing deals but it has an element of truth...,” said BNP Paribas analyst Stephen Briggs.
“I wouldn't be at all surprised if for now we've seen the bottom, for the third quarter.”
Three-month copper on the London Metal Exchange slipped by 0.69 percent to $6,945 a tonne by 11:34 SA time, partly reversing gains of 1.1 percent from the previous session.
Copper prices hit their highest since June 19 on Wednesday at $7,005, recovering from a three-year low at $6,602 a tonne from last week. Prices have shed more than 12 percent this year.
The ECB is expected to keep interest rates steady when it announces a decision at 13:45 SA time.
Yet Draghi is likely to sound a dovish tone at a news conference at 14:30 SA time, leaving copper little scope to post gains on the back of a rising euro.
Also, investors are wary of taking big positions before monthly US jobs figures on Friday, which if strong, would add to expectations the US Federal Reserve will scale back stimulus later this year - a move that would further boost the dollar.
Meanwhile, China's copper importers are being forced by bottlenecks in LME's warehousing system to queue up for deliveries of metal they have already bought, resulting in spot copper import premiums rising by a third since mid-June.
This helped push cash copper on Tuesday to an $8 premium against the benchmark three months contract, the highest in a year. The premium fell back to $1.75 on Thursday.
“The net shorts were at pretty high levels prior to this week and all it took was some awareness that China is actually looking for a lot of copper and there is not a lot available in the market,” analyst Sijin Cheng of Barclays in Singapore.
“There have been small improvements in the physical market, but not necessarily enough to drive a sustained rally.”
In industry news, open-pit mining at Freeport McMoRan Copper and Gold's Indonesian unit, the world's second-largest copper mine, is now running at full capacity after a prolonged closure due to an accident at the site, the firm said earlier. - Reuters