Three-month copper on the London Metal Exchange was down 1.1% to $9,102 a tonne at 0811 GMT. Investors interpreted a rebound in U.S. business activity in February to mean interest rates will need to stay higher for longer to control inflation, with Wall Street posting its worst performance of the year on Tuesday.
The dollar was buoyant on Wednesday, making it less attractive for other currency holders to buy dollar-priced copper.
A stronger dollar sent China's yuan to a seven-week low. Investors were also closely watching post-COVID demand recovery trends in China.
"Demand prospect is here to underpin the market, but weak market fundamentals amid stubbornly high inventories will cap prices to break the level of 71,000 yuan a tonne," analysts at Meierya Futures said.
The most-traded March copper contract on the Shanghai Futures Exchange ended day trading 0.4% higher at 70,090 yuan ($10,169.91) a tonne. China's total copper consumption would rise around 3.5% in 2023 to 14.6 million tonnes, according to Rosealea Yao, an analyst at consultancy Gavekal Dragonomics.
"That improvement has probably already been priced in by the 6%-10% rise in domestic copper prices since the reopening rally started in early November," she said in a note. "Any further price gains from Chinese demand will probably be limited."
LME aluminium slid 1.4% to $2,433 a tonne, nickel fell 2.7% to $26,375, zinc declined 1.9% to $3,076.50, lead eased 0.8% to $2,125.50 and tin lost 1.1% to $27,220. SHFE aluminium shed 0.3% to 18,755 yuan a tonne, while tin rose 1.9% to 219,000 yuan, zinc climbed 0.2% to 23,550 yuan, lead added 0.5% to 15,440 yuan, and nickel lost 1.1% to 207,050 yuan. For the top stories in metals and other news, click or ($1 = 6.8919 Chinese yuan renminbi) (Reporting by Siyi Liu and Dominique Patton; editing by Nivedita Bhattacharjee and Mark Potter)
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