LONDON (Thomson Financial) - Copper edged up, having earlier hit its lowest level since March, as traders took advantage of lower prices.
The metal was still at lower levels, however, as rising inventory and weak equity markets sparked fears of lower demand.
Players reckon global economic turmoil, which is forecast to continue through 2008, will soften metals demand.
Meanwhile, copper LME stocks rose 2,800 tonnes and now stand at 185,500 tonnes. Analysts agree that swelling inventory is a sign of weak demand.
Since mid-September, when sub-prime woes heavily weighed on the metals market, copper stocks have risen steadily by around 40 pct.
At 12.57 pm, LME copper for three-month delivery was up at 6,555 usd against 6,515 usd, having earlier hit 6,430 usd, its lowest since mid-March.
'The 6,720-50 usd level, previous bottom is now the key hurdle and 6,300 usd is the next support,' said UBS analyst Robin Bhar. He warned: 'In the copper market the more highly visible LME stocks have increased sharply since summer which may have made participants become complacent; overall industry stocks though remain below three weeks.'
Metals prices, in recent months, have been mainly determined by the global economic picture and have mostly ignored any fundamental news.
'We remain convinced that this environment provides good buying opportunities across the complex as our economists have yet to forecast a full-bore recession, but instead see a more restrained slowdown in the US economy in 2008.'
Earlier this week, however, the US Federal Reserve cut its economic growth forecast for 2008 to 1.80-2.50 pct from its June estimate of 2.50-2.75 pct.
In addition, the bank said inflation is now expected to slow to 1.8 pct from around 2.95 pct this year.
Such remarks from the bank sparked fears of slower growth, another interest rate cut, and hammered the dollar to even lower levels.
While gold and oil would likely get a boost from another interest rate cut as the dollar would almost certainly decline further, metals tend to focus instead on the global economic picture and the fact that any weakness could hit demand.
As the dollar weakens, most commodities rise as they become cheaper for those trading in other currencies.
Trading conditions today are thinned by the US Thanksgiving Holiday.
Elsewhere, zinc was up at 2,215 usd a tonne against 2,200 usd. Lead was lower at 2,875 usd against 2,901 usd.
Nickel was largely flat at 29,700 usd a tonne against 29,695 usd, aluminium edged down to 2,512 usd from 2,521 usd, while tin rose to 16,250 usd from 16,000 usd. anealla.safdar@thomson.com as/rw COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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