SINGAPORE, Jan 29 - Shanghai copper futures rose just under 1 percent on Monday, but dealers were cautious questioning whether a recovery in London futures last week could be sustained.
The most active April contract rose 430 yuan, or 0.8 percent, to 53,830 yuan ($6,923) a tonne by the midday break on Monday. Earlier, prices were up nearly 2 percent.
"Some profit taking is putting a little pressure on Shanghai prices, as traders have little confidence in the rebound in London," Wang Zheng, an analyst at Dalu Futures in Shanghai, said.
Volumes were down, with many investors sidelined by the approaching Lunar New Year, a spate of U.S. data this week and concerns about what China may do to cool economic growth.
Spot copper in eastern China was down 200 yuan at between 56,350 yuan to 56,550 yuan.
Copper for delivery in three months on the LME was $10 higher at $5,820 a tonne by 0444 GMT.
The market will watch for a series of data this week, of which the results of a two-day meeting of the U.S. Federal Reserve, starting Tuesday, is seen as most significant.
"There will be a lot analysis of the tea leaves of the Fed Reserve statement," ANZ analyst Andrew Harrington said.
"People will be looking for signs of bias towards future interest rate changes." Investors were also wary after renewed comments from China's economic planner, which wants to slow the country's economy this year from the 10.7 percent rise in growth in 2006.
"Judging from the results of economic macro controls, we can say the economy is running in a desired direction. But we still think 10.7 percent GDP growth is too high -- well, it's fairly fast," NDRC Secretary-General Han Yongwen told reporters on the sidelines of a news conference. [ID:nSP165461]
The most traded April Shanghai aluminium futures contract rose to 19,460 yuan from 19,410 yuan.
"The price is relatively weak compared to the LME," an aluminium dealer in Shanghai said.
"The first reason is currency appreciation -- the government says the yuan will rise 5 percent against the dollar this year but we think it could gain 6 to 7 percent." The trader said rising domestic production capacity -- seen up by 778,000 tonnes or 8 percent from 2006 to 2007 according to the Reuters Metals Production Database -- and the approach of the Lunar New Year, also weighed.
"We are nearing the Lunar New Year so downstream consumers will close their factories and we will see an increase stocks in warehouses," he said.
LME aluminium was flat at $2,795, with the market watching a dominant position play out.
Economist John Kemp at Sempra Metals noted that open interest for the March 22 prompt date had risen by around 16,600 lots according to latest LME data.
"Most of the nearby positions seem to have been rolled forward -- especially to the March 22 prompt date," he said.
"The dominant long's position was originally around 24,000 lots prompt Jan 17. If 16,000 lots have been rolled forward to March 22, that would leave around 8,000 lots nearby.
Nickel for delivery in three months on the LME was at $37,900 a tonne, down $200 from Friday, when nickel soared to a record for the eighth session in a row, touching $38,950.
Prices were supported by labour negotiations at Xstrata Plc's Sudbury, Ontario operations, which stalled before the weekend and an announcement that talks between China's Jinchuan and Philnico to develop a 41,000 tonne-per-year nickel project in the Philippines had broken down.
Stocks in LME warehouses fell 72 tonnes to 4,878, of which
2,220 tonnes are earmarked for delivery, leaving just 2,658
tonnes left to support the 1.4 million tonne-per-year market.
Base metals prices at 0444 GMT
Metal Last Net Change&nb
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