Copper stabilises after positive Japan

Copper was steady on Monday, supported by glimmers of economic resilience in Japan, a drawdown in inventories of the metal, and a softer dollar, but investors were wary after wild market swings last week. Copper for three-month delivery on the London Metal Exchange (LME) was down less than a per cent at $8,860 per tonne from Friday's $8,865 close. "The markets are taking a breath; we ran the marathon at a sprint last week," Nick Moore, global head of commodity strategy at RBS Global Banking and Markets, said. "Markets are in limbo with a slightly positive tone. The uncertainty is still there, and we're still watching the politicians." Article continues below Last week, copper posted its first back-to-back weekly fall since early June on fears about the global economy and growth prospects in China, which accounts for nearly 40 per cent of total copper demand estimated at around 119 million tonnes this year. "Reports of a slowdown in China rail investments, a cut in the number of public homes China will construct and tightening measures are some of the worries that are impacting sentiment for base metals," ANZ analysts said in a note. Data yesterday showed Japan's economy shrank less than expected in April-June following the earthquake and tsunami in March, boosting Japan's Nikkei index 1.37 per cent. Japan accounts for 5 per cent of world copper demand. In another thumbs-up for copper, inventories of the metal used in power and construction in LME-monitored warehouses fell 1,175 tonnes. "During what is a normally a weaker month for copper [demand] the LME inventories have not been rising, that's certainly something," Moore said.