LONDON Copper edged lower on Wednesday ahead of Chinese data expected to show slower growth and amid uncertainty about whether a European summit will make progress in solving the region's debt crisis.
Three-month copper on the London Metal Exchange fell $5 in official midday trading to $8,120 a tonne, giving up earlier gains when it touched an intraday high of $8,182.
The market, sapped of liquidity during LME Week when many participants are in meetings and attending receptions, has tested the bottom of its recent range of about $8,100 to $8400 over the past few days.
A two-day European Union summit starts on Thursday, which may focus attention on disputes over closer fiscal union as a long-term solution to the euro zone crisis.
"I'm not sure we're any closer to any sort of agreement and with the lower interest rates on peripheral debt across Europe, the incentive to do something now is reduced," said Nic Brown, head of commodities research at Natixis in London.
"It's all simmering along... but it would certainly be a step forward if Spain did move to request assistance."
Copper found support on its probes to the downside from a weaker dollar and as news emerged from Moody's Investors Service affirming Spain's investment grade rating.
The euro's strength pushed the dollar index down to a one-month low, making dollar-denominated commodities like London copper cheaper for holders of other currencies. .DXY <USD/>
Also helping support prices was a report by Kyodo News that Japanese Prime Minister Yoshihiko Noda plans a new round of economic stimulus by the end of next month as the country has entered a lull. The report quoted sources close to the prime minister.
The market was also digesting indications that the copper market would be better supplied next year from annual talks about premiums and treatment and refining charges (TC/RCs), Brown said.
The TC/RCs are expected to rise moderately to around $70 per tonne and 7 cents per pound and premiums to fall by about $5 a tonne.
"That's a sign that the copper market is a little bit better supplied with ores and concentrates going forward, that the market is not quite as tight as has been over the past year," Brown said.
Signs of better copper supply next year was supported when BHP Billiton, the world's No.2 copper producer, said copper production in the quarter rose 24 percent from a year ago, with its majority-owned Escondida mine in Chile headed for a 20 percent production increase in fiscal 2013.
WORRY ABOUT CHINA GDP
In China, the most active January copper contract on the Shanghai Futures Exchange fell 0.2 percent to close at 58,660 yuan ($9,400) per tonne.
"Shanghai base metals have resisted rising... there has been a feeling of uncertainty in China ahead of GDP figures tomorrow and the 18th Communist Party Congress, which made investors more inclined to sell today," the trader added.
Economists polled by Reuters indicated China's annual economic growth probably slowed for a seventh straight quarter in the July-September period to expand 7.4 percent, the weakest level since the depths of the global financial crisis.
In the physical markets, traders said spot copper demand was still lackluster, with the day's spot-to-front-month discount doubling from Tuesday to as high as 200 yuan.
Broker Marex Spectron noted tightness in aluminum December futures, with December at a premium of $2.15 over the three month contract.
Triland also pointed out the tightness and said in its evening note: "We recommend to monitor this closely and use eventual contangos to protect against a situation we had during September this year."
Three-month aluminum rose 0.2 percent to $1,960 per tonne in official rings. Stocks data showed a large fresh net cancellation of 63,550 tonnes in Antwerp.
Galvanizing metal zinc ticked $2 firmer in official trading to $1,900 a tonne and battery material lead added 0.2 percent to $2,117.
Tin was not traded in official rings, but was bid at $21,230 a tonne, down 1.3 percent from Tuesday's close, and stainless steel ingredient nickel fell 0.3 percent to $16,875.
($1 = 6.2640 Chinese yuan)
(Additional reporting by Carrie Ho, editing by William Hardy)