London copper prices hit a three-week high on Friday on a weaker US dollar and hopes of demand recovery in top consumer China, although mounting recession fears still kept it on track for a fourth consecutive monthly fall.
Three-month copper on the London Metal Exchange rose 1% to $7,837 a tonne, as of 0737 GMT, its highest since July 8.
The most-traded September copper contract on the Shanghai Futures Exchange ended daytime trading up 1.7% to 60,100 yuan ($8,928.70) a tonne.
China’s factory activity likely expanded at the fastest pace in a year in July, a Reuters poll showed on Friday, as production in COVID-hit manufacturing hubs resumed after emerging from lockdowns.
The dollar index fell 0.5% to a more than three-week low, making greenback-denominated metals less expensive for other currency holders.
Copper, which is used as a gauge of economic health by investors, has declined by about 5.2% this month, tracking its longest monthly run of losses since August 2015.
Sharply higher interest rates, red-hot inflation and a prolonged energy crisis are leading to conviction that the world economy is headed inexorably towards recession.
DATA: The US economy unexpectedly contracted in the second quarter, raising the risk that it was on the cusp of a recession.
“Despite the dovish Federal Reserve boosting anticipatory assets like stocks, commodities trade in the real world of gloom and recessionary doom,” said Stephen Innes, managing partner at SPI Asset Management.
“I think the Fed will stay on its mission to tame inflation at the expense of growth and that will limit copper’s top side ambitions.”
COVID: China is sticking to its “dynamic zero-COVID” policy, state media said after a high-level meeting of the ruling Communist Party on Thursday.
FACTORY OUTPUT: Japan’s factories ramped up output at the fastest pace in more than nine years in June as disruptions due to China’s COVID-19 curbs eased.
NICKEL: Russian metals producer Nornickel said on Thursday its second-quarter nickel production fell by 6% quarter-on-quarter to 48,472 tonnes.
PRICES: LME aluminum rose 0.8% to $2,476.50 a tonne, zinc jumped 1.9% to $3,218.50 and lead gained 1% to $2,017, while nickel eased 0.1% to $21,910 and tin fell 0.4% to $24,255.
Shanghai aluminum gained 2.2%, zinc rose 4%, nickel climbed 2%, lead added 0.4% and tin gained 0.5%.
($1 = 6.7421 Chinese yuan) (Reporting by Brijesh Patel in Bengaluru; editing by Subhranshu Sahu and Jason Neely)