The euro rose a two-week high versus the dollar, as talk of ECB action to ease Spanish and Italian borrowing costs resurfaced, even though the central bank tried to quash such speculation on Monday. <FRX/>
A strong euro makes dollar-priced copper cheaper for European investors.
Overall though, gains in copper were likely to be limited by the intractable euro zone debt crisis, and as growth slows in top metal consumer China, while recovery stutters in the United States, the world's largest economy.
"You've got hopes about the ECB again ... but the general trend hasn't changed much from July, we're still fairly range bound," said Citi analyst David Wilson.
"Markets are nervous about taking outright positions in either direction at the low $7,000's the general view is that copper won't go lower, and at $7,500 there isn't conviction on the upside."
Three-month copper on the London Metal Exchange gained 0.91 percent to $7,524 per tonne in official midday rings, after dropping 1.1 percent in the previous session. Open interest was at 229,844, its lowest since early 2007.
A story in British newspaper The Daily Telegraph saying it could confirm weekend reports that ECB experts were examining plans to effectively cap Spanish and Italian yields lifted investor risk appetite even if the bank has so far denied the speculation.
In China meanwhile, risk assets including copper received a modest boost after local media reported the Chinese city Chongqing was planning to invest $236 billion in seven major industries.
Import data from the world's top consumer, meanwhile, showed a marginal rise for July, with shipments of refined copper into China at 254,339 tonnes versus 250,097 tonnes in June.
"For now, with no clear trading direction, LME copper will be stuck within a range of $7,200-$7,800. But downside risks will increase over the longer term as Chinese consumer demand remains weak with no sign of improvement in global economics," said Andy Du, derivatives director at Orient Futures.
CHINA PHYSICAL ALUMINIUM MARKET WEAK
In other metals traded, packaging metal aluminium rose 0.93 percent in midday rings to $1,854, but remained not far off last week's low of $1,827.25, its weakest point since November 2009.
Although the latest aluminium production figures point to falling daily output in China, physical traders said the market still feels sluggish.
"There have been some aluminium imports for financing deals recently after the spreads narrowed, lowering losses for importers," said a Shanghai-based trader.
"But the imports don't indicate improving consumer aluminium demand, which is still weak. Imported spot premia are about $230-$280, while in domestic trades, you get zero premium."
In industry news, an alumina refinery 33 percent owned by Aluminum Corp of China Ltd (2600.HK)(601600.SS) and located in the southwestern region of Guangxi is being temporarily shut on environmental grounds, company sources said, further curbing local supply of alumina.
Soldering metal tin rose 0.84 percent to $18,705 a tonne, having earlier hit $18,900, its best level in a month.
Latest LME stocks data showed nearly half the exchange registered material is still 'cancelled' or set to leave warehouses. Also indicating tightness in nearby supply, cash tin was trading at a premium of $1 a tonne over the benchmark three-month price.
Elsewhere, zinc, used in galvanizing rose 1.61 percent to $1,825, battery material lead rose 0.68 percent to $1,922, while stainless-steel ingredient nickel was last bid up at $15,650 from $15,550.
(Reporting by Maytaal Angel; Editing by Alison Birrane)
Source: http://www.reuters.com/article/2012/08/21/us-markets-metals-idUSBRE87J01Z20120821
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