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Copper rises, but cloudy demand outlook limits gains

Kitco News

(Reuters) - Copper prices rose on Tuesday, tracking the U.S. equities market on prospects of a less-aggressive approach by the Federal Reserve, although gains were limited on weak China data.

The most-traded September copper contract on the Shanghai Futures Exchange rise 0.2% to 62,040 yuan ($9,129.84) a tonne.

Three-month copper on the London Metal Exchange dipped 0.3% to $7,952.50 a tonne, as of 0710 GMT, having risen in most of the Asian trading hours to as much as 0.9%. The contract dropped 2.8% in the previous session, the steepest daily decline in a month.

"The price movement is just in line with macro numbers, like high yield debt in the United States and U.S. equity markets. The only thing keeping it from moving higher in larger steps is the weak China demand," said a trader.

U.S. stocks rose on Monday, with growth shares extending a recent rally, helped last week by signs that inflation may have peaked in July. Chinese regulators' latest support in its property sector, which consumes a vast amount of metals, also aided sentiment.

However, metals demand outlook remained tepid after China reported poor economic data in July.

"I think we will have a small window for a relief rally today until tomorrow, then soften for the rest of the week as U.S. stocks take a breather from the recent rally and drag the rest of the risky assets down with it," the trader said.

LME aluminium increased 0.6% to $2,423.50 a tonne, zinc was up 0.8% at $3,593.50 a tonne, while lead fell 0.3% to $2,171 a tonne. ShFE aluminium declined 0.3% to 18,225 yuan a tonne, nickel fell 1.9% to 173,600 yuan a tonne, lead eased 0.4% to 15,040 yuan a tonne while zinc rose 1.5% to 25,095 yuan a tonne. \

Aluminium producer Henan Zhongfu Industrial said they were suspending production this week as China's Sichuan province rationed industrial electricity consumption in its worst heat wave in 60 years.

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