COPPER prices settled a shade higher overnight, recovering from earlier losses with the help of a weaker US dollar.
But signs of significant economic improvement are still needed before higher prices can be sustained, traders and analysts said.
Copper for September delivery on the New York Mercantile Exchange's COMEX division rose US1.25c to close at $US2.2820 a pound.
On the London Metal Exchange, copper for delivery in three months ended up $US10 at $US4970 a tonne.
Data suggesting an economic and demand recovery may be in sight has boosted industrial metals in recent weeks, but reports overnight showing US manufacturing in the mid-Atlantic area contracted less severely than expected in June failed to have that same bullish effect for prices.
“We did not see much of a reaction, and I think it's indicative of how overdone some of these markets have gotten,” said Matthew Zeman, head of trading with LaSalle Futures Group in Chicago.
“I think a lot of these market got a little ahead of themselves and, although technically we may be coming out of the recession, I think the recovery period is going to take longer than people estimated.”
Some analysts said the healthier data was already priced into the market.
“People are waiting for the actual concrete evidence that we have improved,'' Citigroup analyst David Thurtell said.
“Unless we get a dramatic further improvement in some of the economic data, I think we'll just tread water.”
The US dollar edged lower against a basket of currencies after the positive US data. A weaker dollar makes metals priced in the US currency cheaper for other currency holders.
Underlining concerns the global economy faces further struggles, China Minmetals said industrial metals demand would take one or two years to resume growth.
This follows Rio Tinto's warning this week that it expected weak commodity markets to continue to hurt its bottom line.
Stockpiling by China, the world's top copper consumer, has also helped the metal rise by about 60 per cent this year.
Aluminium closed at $US1642 per tonne, up from $US1622 on Wednesday.
LME stocks for the metal, used in transport and packaging, jumped 12,675 tonnes to a record 4.37 million tonnes -- a reminder of weak demand for the metal.
Steel ingredient nickel was at $US15,005 per tonne, versus $US14,850 Wednesday, while zinc rose to $US1563 a tonne from $US1555.
Battery material lead was at $US1675 a tonne, up from $US1661, while tin was at $US14,850 a tonne, down from $US15,150.
Investors are bracing themselves for weakness in industrial metals as markets enter a traditionally quiet trading season.
But some analysts see Chinese demand providing a crutch once again later in the yea
