SINGAPORE, June 3: London copper trimmed an early advance on Monday, after manufacturing sector reports in top metals consumer China showed that large state enterprises were still growing but activity at smaller companies shrank last month.
China’s official PMI rose to 50.8 in May from 50.6 in April, data showed on Saturday, beating market expectations and raising optimism that the world’s second-largest economy may be stabilising.
But a private sector survey of smaller businesses on Monday showed factory activity shrank for the first time in seven months in May, while growth in the services sector cooled.
‘I don’t think we should be overly pessimistic. The reality is that we are seeing a steady pick-up seasonally in manufacturing. The story of a moderate expansion still holds,’ said analyst Sijin Cheng of Barclays in Singapore.
Three-month copper on the London Metal Exchange climbed almost one percent before fading back to $7,332.75 by 0231 GMT, still up 0.34 percent from the previous session when it finished little changed.
Copper closed the month of May up by 3.6 percent to register its first monthly advance since January.
The most-traded September copper contract on the Shanghai Futures Exchange edged up by 0.27 percent to 52,900 yuan ($8,600) a tonne.
Also supporting metals, U.S. Consumer spending fell in April for the first time in almost a year and already low inflation declined further, undercutting arguments for a near-term tapering of the Federal Reserve’s bond-buying stimulus.
Resurrecting the spectre of supply concerns that tightened the copper market in late 2011, Indonesia told Freeport McMoRan Copper and Gold Inc it cannot resume production at its huge copper mine until the result of an investigation into an accident is complete.
Reflecting a less negative outlook on copper by investors, hedge funds and money managers trimmed net shorts in copper for a fourth week, a report by the Commodity Futures Trading Commission (CFTC) showed on Friday.
(AGENCIES)
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