Copper touched its highest in more than two years on Thursday, underpinned by a softer dollar and expectations of renewed demand from emerging markets, but it dipped as pausing equity markets helped temper gains.
Benchmark copper eased back from a 27-month peak of $US8490 a tonne to close at $US8400 a tonne, versus Wednesday's close of $US8362 a tonne.
"Metals track equities... and given the rally we've had over the last few weeks, it wouldn't be a surprise if metals paused for breath at the moment," Societe Generale analyst David Wilson said.
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"But I still think there is enough momentum to still see new highs."
European shares slipped while US stocks were little changed on Thursday.
Copper has rallied by around 40 per cent since hitting a low in June and is only about $US500 away from an all-time high of $US8940 a tonne struck in July 2008.
The talk of quantitative easing in the United States to give a boost to the world's largest economy has been knocking down the dollar and benefiting commodities. On Thursday the dollar's tumble against a basket of currencies sparked a rally across major commodities such as gold and base metals.
"The (softer) dollar is massively supportive and it's expected to continue to weaken through the first half of the next year, and that will remain a supportive factor," Wilson said.
Fundamentally the market remains tight for metals such as copper and tin with miners struggling to keep up with demand from developing markets in particular.
"Emerging markets have been proven to be more than capable of being the locomotive when it comes from commodity demand," said David Thurtell of Citi.
"People are wondering why copper is above $US8000 when the US, UK, Europe, Japan are still in a hole, but the bigger picture is a pretty strong emerging market."
China, the world's top consumer of base metals, will release its third quarter and September economic indicators next week, which are expected to show growth continues at a robust pace of 9.5 per cent.
US data showed rising food and energy prices pushed inflation at the wholesale level up twice as fast as expected last month. Initial jobless claims rose to a higher than expected 462,000 last week.
Tin continues to print historic highs amid dwindling supply from the world's top exporter Indonesia due to heavy rains that have disrupted production and dwindling grades of ore.
"The production problems in Indonesia, the world's second largest producer and largest exporter of tin, are increasing," Commerzbank said in a note.
Indonesia's state miner PT Timah Tbk accounted for over 40 per cent of Indonesia's total tin production last year, it said.
"The company has... stopped its tin sales on the spot market for now and is currently trying to negotiate new supply contracts with its long-term customers. This should mean further headroom for tin prices in the near term, despite the new record high of over $US27,000 a tonne," Commerzbank said.
The latest LME data showed that tin stocks held in LME-bonded warehouses rose by 135 tonnes net today, but they remain close to their lowest in almost one and a half years.
Three month tin closed at $US26,950 per tonne, having printed a new high of $US27,338.50 earlier.
Energy-intensive metal aluminium hit its highest since April at $US2459 per tonne before closing at $US2410 per tonne versus $US2417 on Wednesday's close.
Zinc, used in galvanising, closed at $US2415 per tonne, against a $US2410 close on Wednesday, having rallied to $US2444 also its highest in nearly six months earlier.
Sister metal lead was untraded at the close but bid at $US2411 versus $US2435 per tonne at Wednesday's close. It printed its highest since January at $US2473 earlier.
Nickel, used in stainless steel, closed at $US24,305 per tonne against a $US24,400 close on Wednesday.
Reuters
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