(Updates prices)
LONDON, May 12 (Reuters) - Copper prices hit their
lowest level in more than five months on Friday as fears of
slowing demand in top consumer China, rising inventories and a
stronger dollar reinforced negative sentiment.
However, traders said funds taking profits on short
positions - bets on lower prices - after the recent slide helped
copper to recover later in the session.
Benchmark copper on the London Metal Exchange (LME)
was up 1.1% at $8,257 a tonne at 1604 GMT. Prices of the
industrial metal have dropped 10% since mid-April.
"The market is on pause, but the bears are still in
control," said Al Munro, base metals strategist at Marex.
Munro added that physical demand was weak and that
short-term direction for industrial metals would be determined
by macro events and the dollar.
A rising U.S. currency makes dollar-priced commodities more
expensive for buyers with other currencies.
One reason for the dollar's recent strength has been the
standoff between U.S. President Joe Biden and top lawmakers over
raising the government's $31.4 trillion debt ceiling.
Copper stocks in LME-registered warehouses have climbed 50% to 76,625 tonnes since April 18, reinforcing
the picture of languishing demand.
The latest trigger for the sell-off in industrial metals
came on Thursday with Chinese inflation data highlighting the
broader economy's struggles to pick up pace after the lifting of
COVID-19 curbs in December.
"If (China's) economy develops less strongly than the
government anticipates, the low inflation will give the central
bank scope for a more expansionary monetary policy," Commerzbank
analysts said in a note.
In other metals, aluminium was up 1.2% at $2,237 a
tonne, zinc rose 0.5% to $2,560, lead ceded
1.6%to $2,073, tin dropped 1.5% to $24,920 and nickel was up 2.3% at $22,280.
Traders said nickel's rise was also because of funds cutting
short positions, but expectations were for lower prices as
Indonesian production continues to ramp up and surpluses emerge
over the course of the year.
(Reporting by Pratima Desai
Editing by David Goodman)
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