Copper rose on Friday as the dollar fell, but the metal kept within recent ranges with investors reluctant to make big bets ahead of a meeting of central bankers in the United States, at which they hope Fed Chairman Ben Bernanke will hint at monetary stimulus that could spur growth and support demand.
Copper broke four sessions of losses, moving in tandem with other financial markets. European stocks gained, also halting a three-day drop, and oil rose to $113 per barrel.
Three-month copper on the London Metal Exchange was $7,590 per tonne in official rings, from $7,570 at the close on Thursday.
But it is still down around 13 percent from a year peak hit in February, and has been trapped in a range of $7,300-$7,700 this month in low volumes.
Open interest - contracts that are 'live' and have not yet come to expiry or closed out - fell to 220,535 lots, the lowest level since December 2006.
“Markets are on hold ahead of Bernanke's speech, that's very much the dominant theme that people are looking at across all financial markets,” BNP Paribas strategist Stephen Briggs said.
“They're all be waiting with bated breath for what he will say, so until that moment approaches no-one is going to take any direction. It is pretty crucial.”
Briggs said BNP Paribas was more confident that Bernanke would say something that would increase the prospect of further monetary stimulus, or quantitative easing, at the meeting in Jackson Hole, Wyoming on Friday.
But others were wary of the impact the meeting would have on markets.
“Commodity markets are becoming increasingly nervous as the Jackson Hole symposium approaches ... downside risks persist in the days ahead,” Credit Suisse said in a research note.
A steady stream of positive economic data from the United States over the past week in areas such as consumer spending, housing, inflation and employment have raised questions over whether more stimulus is warranted.
Eyes are already moving to the weekend, when China will release its official manufacturing managers' index (PMI). “A weak reading would increase the downside risks,” Credit Suisse said.
A Reuters survey showed the PMI may have eased to a nine-month low of 50 in August, which would support the case for fresh easing measures by the central bank.
The dollar fell to a three-month low versus a basket of currencies, supporting commodities priced in the U.S. unit because it makes them cheaper for holders of other currencies. But the dollar may strengthen if Bernanke does not flag further stimulus.
TIN
In other metals, LME tin, untraded in rings, was bid at $19,625 per tonne from $19,600 at the close on Thursday. The metal is on track to post a 6 percent fall on the week - the biggest weekly drop in more than six months.
Indonesia's largest tin miner PT Timah said on Wednesday it had re-started spot sales after a three-week stoppage.
That took the steam out of a rally that saw prices shoot up 13 percent last week, rising as high as $20,901, on news that more than 90 percent of Indonesian tin producers had stopped production.
“Tin is a very thin market at the best of times, the rally was looking stretched and then out came the fundamental news that was announced by PT Timah and that was the trigger for the sharp sell-off,” Briggs said.
“When you get a piece of negative news tin tends to drop like a stone because of the liquidity. It has begun to stabilise and I think the fundamentals are still pretty solid.”
Three-month lead was $1,962 in rings, from a close of $1,944 on Thursday, and zinc was $1,830 per tonne from $1,834.
Nickel, untraded in rings, was bid $15,960 from $15,975 and aluminium, also untraded, was bid at $1,869 from $1,876. - Reuters