Copper holds steady despite weak U.S. data

Copper ended with modest losses on Wednesday, holding just below a recent four-month peak even as soft industrial output data in the United States and talk of further policy tightening in China rekindled global demand concerns.

"This thing is kind of coiling … the ranges are tightening," said Steve Platt, futures analyst with Archer Financial Services in Chicago.

"It looks like it wants to still go higher."

Copper for December delivery on the COMEX metals division of the New York Mercantile Exchange eased 0.20 cent to end at $3.4665 per lb, after dealing between $3.4330 and $3.4780.

Last week, the active December contract rallied to $3.5345 per lb, its highest level since late April.

"If we can get through the highs for yesterday, which were around $3.49, I suspect we will take out the recent peak," Platt said.

On the London Metal Exchange （LME）, benchmark copper fell $40 to close at $7,620 a tonne.

In after hours trade, the metal pared a portion of its losses to trade at $7,625.

Markets managed to recover from an initial sell-off, which pulled prices in New York and London to session lows at $3.4330 and $7,548, respectively, tied to the release of U.S. industrial production data which showed output rose at a slower 0.2 percent pace in August.

"Two-tenths of a percent increase when we should be in recovery mode is nothing to write home about," said John Gross, long-time copper market analyst and publisher of the Copper Journal.

Sentiment took an additional hit from news that China's banking regulator was reported to be considering raising capital adequacy ratios at banks deemed "systemically important."

"It looks as if the government in China is focusing on trying to constrain excesses in the property market, that it is considering increasing capital ratios," said Dan Brebner, analyst at Deutsche Bank.

The trade's focus is also on the U.S. Federal Reserve, which could soon announce more quantitative easing. Easier monetary policies typically benefit perceived risk assets because there is more liquidity seeking returns.

WATCHING CHINA COPPER IMPORTS

The United States is the world's second-largest consumer of copper after China, which many still expect to account for the dragon's share of copper demand growth. Analysts expect to see this in import data over coming months.

Refined Chinese copper import data for August, due later this month, is expected to show a rise based on preliminary numbers last week, while U.S imports also appear to be picking up after a slowdown earlier this year.

Aluminum eased $5 to end at $2,154 a tonne, zinc shed $30 to finish at $2,145, while lead was untraded at the close but last bid at $2,235 from $2,242 on Tuesday. Nickel was last at $23,000 a tonne from $23,350.

Tin shot up $500 to $23,150 per tonne, near a session peak at $23,200, its highest since late July 2008, supported by recent developments in Africa. Metal Prices at 1846 GMT COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2009 Ytd Pct