LONDON, Feb 9 （Reuters） - Copper slipped on Wednesday, as worries higher interest rates in China could dampen industrial demand washed through the market, although a softer dollar lent support.
Three-month copper on the London Metal Exchange CMCU3 was $9,925 a tonne from the closing $10,059 bid on Tuesday. The metal, used in power and construction, touched a record high of $10,160 at the start of the week.
Tin CMSN3 also matched Tuesday's record high at $31,650 amid ongoing supply concerns from top exporter Indonesia.
"You've had the potential implications of the rate hike feeding through the market," said analyst Daniel Major of RBS. China's central bank has raised rates twice in the last six weeks in an effort to bring high inflation under control in the world's top consumer of base metals.
Asian trading desks returned to full strength on Wednesday following the week-long Lunar New Year holidays.
"（However） the currency move today has been relatively supportive," added Major. The euro rose to a session high against the dollar above $1.3700 on Wednesday boosted by central banks buying to diversify their reserves.
Comments by Federal Reserve Chairman Ben Bernanke also weighed on the dollar and on metals, said analyst Leon Westgate of Standard Bank. Bernanke said U.S. unemployment remained too high, suggesting the Fed would push on with its $600 billion stimulusprogramme.
A softer dollar makes commodities cheaper for holders of The longer-term outlook for copper remained positive, underpinned by the risk of a chronic supply shortage developing through 2011 as growth and rising demand in China, outstrip miners' ability to supply the 21 million tonne market by 800,000 tonnes or more.
But traders also said that lacklustre physical demand from China where consumers, reluctant to chase prices at record levels, could erode price support.
"The lack of immediate physical activity continues to give us cause for concern in terms of the potential scale of any near-term correction, should risk appetite drop sharply," said
Standard Bank in a note.
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