London - Copper was flat on Thursday as investors awaited the outcome of a central bank policy meeting in Europe, and volumes were thin before a week-long Lunar New Year holiday in top metals consumer China.

An improved outlook for the global economy this year, reflected in recent positive data from China to the United States, helped lift copper prices earlier this week, although the optimism has yet to translate into strong physical demand.

Three-month copper on the London Metal Exchange was $8,246 a tonne by 12:31 SA time from a close of $8,245 on Wednesday. It hit a four-month high of $8,346 on Monday.

“If you look at the prices over the last week or two, it's come alongside builds in inventories, and fundamentals haven't really started to improve yet,” Barclays analyst Gayle Berry said.

“That said, I think the market is definitely getting a bit more positive on global growth prospects for this year, and in particular I think people are hanging about waiting to see what happens after Chinese New Year, to see if there will be a bit of a pickup in physical activity “

The week-long Lunar New Year holiday starts this weekend.

Before that, investors are waiting for China's trade numbers on Friday.

Copper imports could recover slightly in January after falling in December, although near-record stocks in Shanghai will keep any increase modest.

In the meantime, financial markets will focus on European Central Bank President Mario Draghi's comments on the prospects for the euro zone economy after the central bank's policy meeting on Thursday.

The ECB is widely expected to keep interest rates unchanged, but any dovish hints could put the euro under pressure.

Against the dollar, the euro was nearly flat at $1.3523, holding above this week's trough of $1.3458 plumbed on Tuesday but still shy of a 15-month peak of $1.3711 set on February 1.

A stronger dollar makes metals more expensive for holders of other currencies.

“Volumes remain light and spread interest seems to have taken over from outrights at the moment as macro players have scaled back bets and are just running core positions in advance of the Chinese Lunar New Year Holidays,” RBC said in a research note.

In other metals, three-month tin was at $24,711 per tonne from $24,850 at the close on Wednesday, while zinc was at $2,158 from $2,170.

Three-month lead was at $2,409 from $2,422, and aluminium was at $2,101 from $2,095. Nickel was at $18,276 from $18,320. - Reuters