LONDON, Oct 29 (Reuters) - Copper clawed up from one week lows on Thursday with prices garnering support from a weaker dollar, but gains were restrained as fragile equity market sentiment fanned concern on the strength of economic reovery.
By 1033 GMT, copper for three month delivery MCU3 on the London Metal Exchange traded at $6,450 a tonne from $6,430 at the close on Wednesday. The metal, used in power and construction, earlier hit a one week low at $6,405.
"The dollar/euro rate is the leader for copper prices," said John Meyer, an analyst at investment bank Fairfax. "There is so much liquidity out there that I don't see an overall collapse in the market place."
"The bigger investors may remain sidelined but I think its going to be a traders' market until equities settle down again."
On Wednesday, many industrial metals hit multi-week lows, as weak housing data and a stronger dollar drove prices lower.
Adding pressure on base metals, equity markets have fallen in recent sessions, as investors worry about the outlook for global economic recovery after months of gains. [MKTS/GLOB] "Equity markets are determining short-term trading direction," said Meyer. "It introduces cautiousness into the market, with copper at high price levels it is easy for traders to give it some negative direction."
Currencies have also played a major role is rising commodity prices this year, with a weaker U.S. unit making metals priced in dollars less expensive for holders of other currencies. [USD/]
But some analysts say base metal prices have run ahead of weak fundamentals, with greater prominence given to macro data.
"A persistent theme throughout markets has been the sustainability of the trajectory of recovery," said Barclays Wealth in a note.
"Today's packed calendar of economic news will assist both economists and direct financial market participants to derive some more clarity."
Looking ahead, the U.S. GDP figures from 1230 GMT could give further direction. Economists surveyed by Reuters expect a 3.3 percent annualized pace of growth. [MI/DIARY] [ID:nN26185389]
On Wednesday, Goldman Sachs (GS.N) cut its forecast for third-quarter U.S. gross domestic product growth to 2.7 percent from 3.0 percent.
