London copper rises on rate cut expectations, China demand worries cap gains

Copper prices in London climbed on Thursday with the prospect of a U.S. rate cut in September supporting sentiment, although a firm U.S. dollar and concerns over demand from China capped gains.

Three-month copper on the London Metal Exchange rose 0.3% at $9,287 per metric ton by 0728 GMT, after reversing losses in early trading.

The most-traded October copper contract on the Shanghai Futures Exchange was down 1.1% at 74,200 yuan ($10,434.68) a ton.

The gains in London were aided by upbeat sentiment after Federal Reserve Chair Jerome Powell on Friday delivered his strongest signal that interest rates would be cut in September, a trader and an analyst said.

The market is looking ahead to a key U.S. inflation reading at the end of the week that could offer further clues on the outlook for rates there.

But lingering fears over demand of the metal for power, construction and transportation sectors in top consumer China were weighing on the market.

"Sentiment is not good here given the absence of signs showing any possible strong recovery in the Chinese economy," a Chinese trader said.

The world's leading miner BHP downgraded its forecast for China's copper growth to 1%-2% this year, as housing completions, the major indicator for copper end-use in housing, are expected to contract sharply in 2024, the company said on Tuesday.

LME aluminium dropped 0.6% to $2,480.50 a ton, nickel climbed 0.1% to $17,040, zinc was up 0.4% at $2,893, lead decreased 0.7% to $2,071.50 and tin dipped 0.1% at $32,585.

SHFE aluminium declined 1.3% to 19,710 yuan a ton, lead slipped 0.6% to 17,450 yuan, nickel was 0.3% lower to 131,760 yuan, zinc was 0.2% lower at 24,095 yuan and tin fell 1.4% to 264,210 yuan.