SHANGHAI London copper edged down on Friday, but was on track to post a 0.6 percent weekly rise following data that suggested China's economy is stabilizing and recovery in the United States is slowly gaining traction.
Still, analysts said copper prices were hampered by sluggish downstream demand in China, which is expected to improve only slightly by the end of the year.
Many economists believe that a rebound in China's economy in the fourth quarter will likely be mild, with the country's Commerce Ministry warning that a recovery trend in exports is still not confirmed, despite a surge in exports in September.
The anticipated tepid recovery was also underlined by China's foreign direct investment data, which showed inflows falling 3.8 percent in the first nine months from a year ago, extending the longest run of declines since the depths of the global financial crisis.
"Now that the Chinese and U.S. economies appear to be stable, traders are focusing more on base metals' fundamentals, which are still weak," said CIFCO Futures analyst Zhou Jie.
"Copper's small price movements and trading volumes today underscore the uncertainty over how much the order books of downstream industries can recover in the fourth quarter."
Just over 1,000 lots of copper were traded on LME Select by 0352 GMT, lower than the usual 2,000-3,000 lots for that time of day, while three-month copper on the London Metal Exchange fell 0.5 percent to $8,180 per tonne, after trading flat previously.
The most active January copper contract on the Shanghai Futures Exchange slipped 0.9 percent to 58,590 yuan ($9,400) per tonne by its midday close. It is set to log a 0.9 percent fall on the week, its fourth consecutive weekly drop.
In physical markets, Chinese spot copper was trading at a discount to the ShFE front-month contract of up to 200 yuan, indicative of slow spot demand.
Europe also lent some cheer to the markets as European Union leaders took a big stride towards establishing a single banking supervisor for the euro zone next year, paving the way for the bloc's rescue fund to inject capital directly into ailing banks.
In industry news, Chile's Codelco CODEL.UL, the world's largest copper miner, has lowered by $5 a tonne the premium it will charge in 2013 to deliver metal to clients in Europe, two separate sources told Reuters.
Chinese copper smelters are also seeking to increase treatment and refining charges (TC/RC) for 2013 raw material concentrate term imports by about a quarter from this year after they received higher charges for spot deals this week.
Base metals prices at 0352 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8180.00 -40.00 -0.49 7.63
SHFE CU FUT JAN3 58590 -540 -0.91 5.32
LME Alum 2007.00 -8.00 -0.40 -0.64
SHFE AL FUT JAN3 15545 -05 -0.03 -1.86
HG COPPER DEC2 372.60 -1.70 -0.45 8.44
LME Zinc 1915.50 -5.50 -0.29 3.82
SHFE ZN FUT JAN3 15100 -110 -0.72 2.06
LME Nickel 17200.00 -120.00 -0.69 -8.07
LME Lead 2139.50 -17.50 -0.81 5.14
SHFE PB FUT 15695 -70 -0.44 2.65
LME Tin 21699.00 -76.00 -0.35 13.02
LME/Shanghai arb 1254
($1 = 6.2503 Chinese yuan)
(Reporting by Carrie Ho; Editing by Joseph Radford and Richard Pullin)