By Harpreet Bhal and Maytaal Angel
LONDON, Jan 29 (Reuters) - Copper edged up on Tuesday as
optimism about economic recovery gathered pace following
comments over growth in top consumer China, though gains were
limited by improved supply prospects and caution ahead of a
Federal Reserve policy meeting.
A two-day Fed meeting concludes on Wednesday with investors
awaiting clues on when the central bank will unwind its
ultra-loose monetary policy. They were also reluctant to make
big bets following mixed U.S. economic data.
A report earlier showed U.S. consumer confidence dropped in
January to its lowest in more than a year, though a separate
report showed U.S. single-family home prices rose in November,
adding further evidence of a housing market recovery.
China's top think tank lifted its economic growth forecast
for 2013 to 8.4 percent from 8.2 percent, with faster expansion
seen in the first half of the year.
Three-month copper on the London Metal Exchange
traded up at $8,102 a tonne at 1556 GMT, from a close of $8,050
on Monday. The metal's year-to-date gains amounted to just under
'On the one hand macro newsflow (U.S. consumer data to one
side) is better, and that probably includes China. But on the
other hand there is a sense of more supply coming through in
most metals markets. Net net, the balance is much as it was and
prices are range-bound,' Macquarie analyst Duncan Hobbs said.
A Reuters poll last week showed analysts expect new supply
to push the market into a surplus of 120,000 tonnes in 2013.
MORE THAN ENOUGH LIQUIDITY?
Investors were looking to U.S. fourth-quarter gross domestic
product estimates on Wednesday and non-farm payrolls on Friday
for fresh signs that a fledgling recovery in economic growth is
Further signs of brightening U.S. growth prospects, however,
could fuel speculation the Federal Reserve may consider pulling
back on aggressive easing stimulus.
'The market is giving that impression (of confidence in the
economic recovery) in the way that risky assets generally appear
to be going up. But is that genuinely a reflection of economic
expectations, or is that as much a reflection of the amount of
liquidity that is being put to work in the market?' said Nic
Brown, head of commodity research at Natixis.
'We may find out more by listening to the Fed. At their last
meeting they talked about potentially slowing the rate of
purchases within QE3. If we get any more talk like that, it
would be an interesting signal that the Fed thinks that there is
more than enough liquidity in the system.'
Also on the data calendar for the week are China's official
purchasing manager's index (PMI) and HSBC's final PMI for
January, which are expected to show an uptick in activity in the
world's No.2 economy.
Chinese buying has remained subdued ahead of the Lunar New
Year holiday. China's markets will be closed from Feb. 11 to
Feb. 15. China accounts for 40 percent of refined copper
In other metals, soldering metal tin traded up at
$24,614 a tonne from $24,400 on Monday, while zinc, used
in galvanizing, was at $2,092.75 a tonne from $2,081 a tonne.
Chinese investors, who boosted zinc imports by almost 50
percent last year, will continue to use the metal as a financing
tool in 2013, a move that would support global premiums of the
metal but curb domestic production, traders said.
Battery material lead was at $2,394 from Monday's
close of $2,378, while aluminium was at $2,048.25 a
tonne from $2,050, and stainless-steel ingredient nickel
was at $17,797 a tonne from $17,625.
(Additional reporting by Melanie Burton in Singapore; editing
by Keiron Henderson and Jane Baird)
Keywords: MARKETS METALS/
(email@example.com)(+44 0207 542 4533 Reuters Messaging: firstname.lastname@example.org)
Copyright Thomson Reuters 2013. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.