London - Copper fell on Tuesday, on track for its steepest monthly loss in nearly a year, as concerns about the pace of global growth weighed on industrial metals, but falls were capped by hopes of more monetary easing.
Benchmark three-month copper on the London Metal Exchange traded at $7,105 a tonne in official rings, down from a close of 7,153.50 a tonne on Monday.
Volumes were subdued as China's markets will remain closed until Thursday for Labour Day holidays.
The metal used in power and construction is down 6 percent so far this month, on course for its biggest monthly fall since May last year. It fell to a 1-1/2 year low of $6,762.25 last week.
Investors have been shying away from commodities on fears that more falls could be in store after prices plunged in April.
“We had a decent rebound for copper after the falls (in early April) so I am not surprised to see some profit taking,” said Andrey Kryuchenkov, analyst at VTB Capital.
“The market is sitting tight ahead of Chinese manufacturing PMI data this week, and rate decisions by the ECB and Fed. Ahead of that we don't expect any big movements and volumes are expected to remain thin.”
Expectations have been mounting that the European Central Bank (ECB) will cut interest rates at its policy meeting on Thursday in light of the weakness in the region's economy.
The US Federal Reserve meet this week and is widely expected to keep its current pace of bond buying at $85 billion a month.
A decision is expected on Wednesday.
Also weighing on metals prices was a drop in the euro against the dollar.
A strong dollar makes commodities priced in the US unit more expensive for holders of other currencies.
Some pickup in copper demand from China is anticipated after Chinese markets reopen later this week.
“We still believe that copper prices will move higher into the middle of the year because of improving demand in China,” said analyst Bonnie Liu at Macquarie in Singapore.
Soldering metal tin traded at $20,825 in official rings from a close of $20,895 on Monday, while battery material lead was at $2,038 from $2,044.
Zinc, used in galvanising, untraded in official rings was last bid at $1,887 from $1,907.
Aluminium, untraded in official rings, was bid at $1,886 from $1,899, and nickel, also untraded in rings, was at $15,250 from $15,500
a tonne on Monday.
Nickel output at PT Vale Indonesia Tbk is expected to increase 10 percent to approximately 78,000 tonnes this year, the company said on Tuesday, on the back of strong first-quarter results. - Reuters