London copper hit its highest in almost two months on Monday after data showed China's factory output growth accelerated to eight-month highs in November, but
lingering worries that the euro zone may return to recession next year kept a lid on gains.
Signs of renewed vigour in China's factories have brightened the demand outlook for industrial metals, while glimmers of improvement from sectors of the U.S. economy, such as housing and jobs, are also acting to underpin prices. China is the world's top consumer of metals.
"We've been gathering signs that things in China are going to stabilise and hopefully improve in the year ahead. So the outlook is looking a little bit more favorable for industrial metals," said Alexandra Knight, an economist with National Australia Bank in Melbourne.
"For the United States there's still the fiscal cliff which,
in the short term, could create some headwinds, plus ... there is no doubt the weakness in Europe will have impact on trade and also on the euro ... which affects metals," she added.
Three-month copper on the London Metal Exchange rose
0.85 percent to $8,103 a tonne by 0604 GMT, extending a small gain from the previous session, when it logged a fourth week of gains in a row. Prices earlier hit $8,114 a tonne, the highest since Oct. 19.
Copper has gained steam since mid-November on prospects of improvement in China's economy and hopes for a resolution of the U.S. "fiscal cliff", a combination of government spending cuts and tax rises due to be implemented in 2013 under existing laws that could tip the world's top economy back into recession.
Prices are now up more than 6 percent for the year.
The most-traded March copper contract on the Shanghai
Futures Exchange rose 0.89 percent to 57,960 yuan
($9,300) a tonne.
A pick-up in China's factory output and retail sales growth
to eight-month highs suggested a revival in the world's
second-biggest economy is gaining momentum but optimism was trimmed by November exports that were well below market expectations.
Exports rose an anaemic 2.9 percent while imports were flat year-on-year.
A bright spot in the U.S. labour market came with a jobs
report on Friday that showed U.S. companies kept up their slow but steady hiring pace in November, defying predictions for Superstorm Sandy to have dealt the number a big blow.
Still, the euro had retreated from last week's one-month
peaks against the dollar after Germany's central bank forecast barely any economic growth in 2013, and flagged risks of a recession in the euro zone's biggest economy as the debt crisis hits the bloc's core.
A weaker euro makes commodities more expensive for holders of other currencies.
China's copper demand remains soft amid expectations the country will export more metal next year, after exporting a monthly average of 23,000 tonnes so far this year, Barclays Capital said.
"We believe exports will become more regular, perhaps
averaging 10,000 to 15,000 per month, with smelters having negotiated...tolling exports," it said in a note.
"While such a development is likely to weigh on LME
prices...the reduced cost of exporting copper is likely to
constrain the size and sustainability of a backwardation in LME time spreads," it said.
China's copper smelters stepped up refined copper exports following a tax adjustment over summer that reduced their costs to export and made such trades more attractive.
China's copper imports rose 13.5 percent in November from the previous month, while its crude oil purchases edged down 1.3 percent, customs data showed.