Copper steadied on Wednesday after falls in the previous session following a lack of an indication of further stimulus measures from the US Federal Reserve, but gains were capped by a weak euro and concerns about Europe's debt crisis and metals demand.
Three-month copper on the London Metal Exchange rose to $7,602 a tonne at 12:08 SA time, up 0.1 percent from a close of $7,595 a tonne on Tuesday.
Prices were pressured by falls in the euro versus the dollar, with traders citing a media report that quoted German Chancellor Angela Merkel as saying she could not be sure the European project would work.
A strong dollar makes commodities priced in the US unit more expensive for holders of other currencies.
Lingering worries about a slowdown in the global economy and Europe's persistent debt crisis kept investors cautious.
In addition, China - the world's biggest copper consumer - faces its slowest growth in three years, raising concerns about the
outlook for demand.
“Everyone is concerned about what is going on in Europe and also about the US where economic numbers have been disappointing,” said Nic Brown, head of commodities research at Natixis.
“And although we continue to like the look of the second half of the year in China, there is no denying that second quarter growth there was horrid.”
In his testimony on Tuesday, Chairman Ben Bernanke said the Federal Reserve stands ready to offer more stimulus as needed, leaving the door open for further monetary easing but stopped short of signalling action in the near term.
“It appears that the Fed is prepared to do whatever is necessary and it seems to be unhappy that the politicians are making no progress in solving the fiscal problems until after the (US) election. Bernanke acknowledges that it may be necessary for the Fed to step in at some point,” Brown said.
Trading volumes were thinned by Europe's summer season, where much of the industry shuts down for a break. Highlighting the lack of conviction in the market, open interest in copper is its lowest since July 2009.
Copper prices are trading 0.8 percent lower so far this month, having shed 9 percent in the second quarter as it hit a 2012 low of $7,219.50 a tonne in June.
CHINA CONCERNS
In China's physical markets, traders are handling less base metals volumes than the same time last year, one Shanghai-based physical trader noted.
“Consumer demand for base metals has been hit by a sluggish business climate in China, while Beijing's recent injections of liquidity into the system have also reduced the need for people to buy base metals as collateral for financing,” he said.
Highlighting mounting concerns about China's sagging economy, Premier Wen Jiabao said the country's job market could turn for the worse and the government needed to step up efforts to create more jobs.
In industry news, mining giant BHP Billiton reported annual copper output growth of 15 percent in the June quarter.
In other metals traded, battery material lead was at $1,886 from Tuesday's close of $1,893, while zinc, used in galvanising, was at $1,859.25 from $1,865 and aluminium slipped to $1,900.75 from $1,904.
Soldering metal tin was at $18,706 from $18,895 while stainless-steel ingredient nickel slipped to $16,036 from $16,100. - Reuters