LONDON - Copper rose as dollar weakness boosted industrial metal prices, although concerns about rising London Metal Exchange inventories limited gains.
By 0906 GMT, copper for three month delivery on the London Metal Exchange climbed to $US6,265 a tonne from $US6,190 at the close on Monday.
In the previous session, the metal, used in power and construction, hit a two and a half week low at $US6,050.
But the dollar eased before a two-day Federal Reserve meeting on US interest rates, making commodities less expensive for holders of other currencies.
"Given that Chinese import data for most metals is down month on month (as expected), the market is going to ignore that and follow the dollar," said David Wilson, director of metals research at Societe Generale.
China's imports of refined copper in August fell by a quarter versus the month before, as expected
China is the world's largest metals consumer, with stockpiling efforts combined with investor cash helping to double copper prices this year.
Analysts are wary of base metal price weakness in the coming weeks, however, with many looking to the fourth quarter and 2010 for a real upswing in demand.
"A lot of investors have an eye on next year and that will be broadly supportive of prices," Wilson added. "When we start coming into the fourth quarter, providing we continue to see positive data releases, then I see every reason for prices to be supportive."
In addition to the US Fed meeting on monetary policy, a summit of G20 countries in Pittsburgh later this week may also offer direction.
Inventory worry
The amount of industrial metals stored in LME warehouses continues to weigh on sentiment, with investors concerned that prices may have over run the poor fundamental outlook.
Copper stocks fell 50 tonnes to 331,775 tonnes, to remain near levels not seen since late May. Stocks have now gained about 30 per cent since the middle of July.
Aluminium rose $US16 to $US1,900. LME stocks for the metal, used in transport and packaging, fell 4,825 tonnes but remain at near record levels above 4.6 million tonnes.
"People do follow inventory data quite closely as a guide to the underlying supply and demand conditions," said Dan Smith, an analyst at Standard Chartered. "We see a pretty hefty stockbuild in copper, which has stemmed the rally."
"Investors want to be bullish on these markets (but) the more fundamental stuff is quite bearish. Things will be pretty choppy for the time being."
Imports of primary aluminium to China, the world's top copper and aluminium consumer, dropped to 117,213 tonnes in August from 131,724 tonnes in July.
Steel making ingredient nickel traded at $US17,671 from $US17,400 while battery material lead was at $US2,254 from $US2,215.
Zinc traded at $US1,957.50 a tonne from $US1,919 and tin edged up to $US14,725 from $US14,450.
