Forexpros – Copper futures trimmed gains on Monday, coming off their session highs as concerns over China’s economic outlook lingered following the release of a pair of conflicting reports on Chinese manufacturing activity.
On the Comex division of the New York Mercantile Exchange, copper futures for May delivery traded at USD3.845 a pound during European morning trade, gaining 0.55%.
It earlier rose by as much as 1.1% to trade at a session high USD3.877 a pound.
Copper prices rose to their highest levels of the day during early Asian trade as market participants cheered a report showing Chinese manufacturing gained momentum in March.
The state-affiliated China Federation of Logistics and Purchasing said Sunday that its purchasing managers index rose 2.1 points to an 11-month high of 53.1 in March, up from February’s 51.0. A reading above 50 signifies expansion.
However, a separate report from HSBC showed that manufacturing activity in the Asian nation contracted for the fifth consecutive month and recorded its lowest average reading in three years during the first quarter.
The HSBC PMI dipped to a four-month low of 48.3 last month, down from 49.6 in February.
The government-backed PMI is skewed to large enterprises and more affected by seasonality, with the gauge usually climbing after the Lunar New Year holiday, HSBC said in its release.
The conflicting data was not enough to ease concerns about a potential hard landing for the world’s second biggest economy.
Beijing recently downgraded its growth outlook for 2012, while investors were spooked by a large trade deficit for February and comments from mining giant BHP Billiton that the nation’s demand for iron ore will flatten amid a slowdown in China’s economy.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.
Copper is regarded as a leading indicator of the global economy. It is used in the construction of buildings, power generation and transmission and the manufacture of consumer electronics.
Market participants were awaiting a report later in the day from the Institute of Supply Management on U.S. manufacturing activity.
Elsewhere on the Comex, gold for June delivery dipped 0.3% to trade at USD1,666.85 a troy ounce, while silver for May delivery was flat to trade at USD32.48 a troy ounce.
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