Copper eases more than one per cent

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Copper fell more than one per cent on Thursday, its fourth down day in the past five trading sessions, as the market continued to retreat from its January rally amid Greek debt default jitters and signs of sluggish demand from top buyer China.

Copper failed to find support in another batch of upbeat economic data in the United States and from optimistic remarks from Federal Reserve Chairman Ben Bernanke, who saw signs some of the uncertainty dampening US business investment, including European banking woes, might be waning.

Instead, investors continued to cash in on the metal's surprisingly strong start to the year in which prices climbed more than 14 per cent, trough to peak, to four-month highs. Caution in front of Friday's key monthly US employment data added to the profit-taking push.

"The market is a little over extended. The bull trend is intact, but the market has just run out of steam and needs a little bit of consolidation," said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey.

"While there are signs of improvement in the global situation, copper has discounted an awful lot of that. I think we need some new news to get the market into position to move up to $US4 ($US8,818 per tonne)."

London Metal Exchange (LME) benchmark copper fell $US95 or 1.1 per cent to end at $US8,345 a tonne, widening its retreat from last week's four-month peak at $US8,679.50 to about four per cent.

In New York, the key March COMEX contract shed 6.10 US cents or 1.6 per cent to settle at $US3.7810 per lb, after dealing between $US3.7670 and $US3.8195.

It hit a four-month high last Friday at $US3.9390.

Analysts see good support at around the $US8,000 ($US3.60) level given copper's robust fundamental picture, but warned a recent climb in net speculative copper length could accellerate the downside if sentiment begins to shift.

"The danger here is the substantial net long commitment to the market," LOGIC Advisers' O'Neill said.

Volumes picked up as the market continued to unwind from the highs. Over 56,000 lots traded in late New York business, up more than 25 per cent from the 30-day norm, according to preliminary Thomson Reuters data.

Copper extended declines this week amid signs that Chinese consumers are also reluctant to buy copper at current levels.

"The recent price move was in anticipation of Chinese buying beyond the Lunar New Year. I think in the short term the danger is that people are going to be disappointed," said Nic Brown, head of commodity research at Natixis.

"Physical (copper) premiums (in China) are coming off. That to me is a clear indication that you have a build-up of copper in bonded warehouses, which suggests that the absolute levels of demand in China at the minute are not good."

Credit Suisse said in a note: "For prices to increase further from here, demand indications like physical premia or stocks would in our view need to provide more visible evidence of an improved environment".

Currency-related selling pressure also hit the metal. The euro surrendered earlier gains against the dollar amid ongoing concerns about the lack of resolution on the Greek sovereign debt crisis.

A stronger dollar makes commodities priced in the US unit more expensive for holders of other currencies.

Worries about a resolution to Europe's debt crisis remain, and dismal corporate results showed Europe's economy is suffering increasingly from the problems.

In industry news, miner Xstrata is in talks with Glencore over an all-share merger of equals, confirming reports of a deal that could create a combined mining and trading group worth more than STG50 billion ($A74.46 billion).

"The fact that sentiment amongst companies in the commodities sector is positive and that they expect higher prices in the long term is evident from a planned major acquisition in the sector," Commerzbank analysts said in a note.

"A higher concentration on the producer side is likely to support prices in the medium to long term."

Metal Prices at 1853 GMT (0553 Friday AEDT).

Metal Last Change Pct Move End 2011 Ytd Pct

move

COMEX Cu 378.60 -5.60 -1.46 343.60 10.19

LME Alum 2195.00 -70.00 -3.09 2020.00 8.66

LME Cu 8344.00 -96.00 -1.14 7600.00 9.79

LME Lead 2164.00 -71.00 -3.18 2035.00 6.34

LME Nickel 20875.00 -100.00 -0.48 18710.00 11.57

LME Tin 24145.00 -10.00 -0.04 19200.00 25.76

LME Zinc 2095.00 -36.00 -1.69 1845.00 13.55

SHFE Alu 16270.00 55.00 +0.34 15845.00 2.68