LONDON - Copper prices in London fell slightly on Thursday as concern about rising interest rates and slowing global economic growth offset hopes of stimulus measures for the troubled property sector in top consumer China.
Three-month copper on the London Metal Exchange (LME) was down 0.4% at $8,262 a metric ton in official open-outcry trading.
Market expectations of a government stimulus package from Beijing have helped to lift prices for the metal used in the construction and power industries by 5% from the six-month low touched on May 24.
"The fundamentals remain fairly weak on the demand side, so the longer an announcement on the stimulus package is delayed, the more likely base metals are to resume their downtrend," said Arthur Parish, metals associate at SP Angel.
Supporting dollar-priced base metals, the dollar index fell but remained close to a three-month high with the focus on the U.S. Federal Reserve's June 13-14 meeting.
Canada and Australia surprised investors by raising interest rates this week. Markets are now pricing in a possibility that U.S. rates could stay higher for longer than initially thought, which could eventually hurt demand for metals.
"Sentiment towards copper remains mixed: the dollar strength and China growth concerns remain, but LME copper inventories have started to decline, accompanied by a surge in cancelled warrants," said Standard Chartered analyst Sudakshina Unnikrishnan.
On-warrant copper stocks on the LME rose by 775 tons to 44,525 metric tons on Thursday, taking a pause after recent sharp declines that narrowed the discount for cash copper against the three-month contract to a marginal $1.40, from $66 on May 23.
On the technical front, copper is hemmed in between 200-day and 21-day moving averages at $8,379 and $8,199 respectively.
Among other metals, LME aluminium rose 0.3% to $2,226 a metric ton in official activity while on-warrant LME stocks fell to a four-month low after fresh cancellations .
Zinc fell 1.2% to $2,370, lead lost 1.2% to $2,019.5, nickel was down 0.8% at $21,250 and tin lost 1% to $25,400.
(Reporting by Polina Devitt in London; Additional reporting by Mai Nguyen in Hanoi Editing by Emelia Sithole-Matarise and David Goodman)