-Aluminium markets frets about smelter restarts in China

-Nearly 20,000 tonnes of zinc arrives in LME warehouses

LONDON: Copper rose on Monday as funds and traders reversed short-term bets of lower prices on expectations of economic stimulus, while a stronger dollar knocked the price of other metals.

Benchmark copper on the London Metal Exchange closed up 0.3 percent at $4,710 a tonne, making up some of the ground it had lost on Friday.

Traders said disappointment that copper had not fallen further was behind the position squaring, and that the upside would be limited by the 200-day moving average at $4,790.

“Volumes are low, shorts are backing away for now,” a copper trader said, adding that the 21-day moving average at around $4,625 would provide firm support.

Copper prices fell 1.7 percent on Friday due to uncertainty in the aftermath of the British vote to leave the European Union, which may provoke central banks such as the Bank of England to provide monetary stimulus by cutting rates.

It may also mean the US Federal Reserve delays rate rises.

“There is an atmosphere of expectation of more stimulus to calm markets and we might see some follow through on copper from that,” said Macquarie analyst Vivienne Lloyd.

“But the association is not very strong and people have looked elsewhere to play out their Brexit fears.”

Based on fundamentals, prices are more likely to depend on top consumer China, where economic and demand growth has slowed. Clues to future demand prospects may be seen in surveys of purchasing managers in manufacturing due on Friday.

A Reuters survey shows growth in China’s manufacturing sector likely stalled in June adding to expectations that Beijing will have to roll out more stimulus to boost the sluggish economy.

Other metals were weaker, weighed down by a stronger US currency which makes dollar-denominated commodities more expensive for non-US firms, which typically subdues demand.

Three-month zinc shed 1.1 percent to end at $1,995 after LME data showed nearly 20,000 tonnes of metal arrived in LME warehouses, highlighting the issue of “hidden” inventories.

Three-month aluminium finished 1.3 percent lower at $1,596.50 a tonne.

News that some Japanese aluminium buyers have agreed to pay producers a premium of $90 per tonne on shipments in the July-September quarter were expected to weigh on sentiment as that is a 22-23 percent fall from the previous quarter.

Also undermining aluminium were worries that recent gains could mean Chinese smelters restarting shuttered output.

“Producers ... have curtailed production. Cuts in China need to be permanent for prices to bottom out. Given the country’s reform drive, we see scope for this to happen,” Bank of America Merrill Lynch said in a note.

Lead ceded 1.6 percent to close at $1,702, tin ended down 2 percent at $16,815 and nickel dipped 0.4 percent to $8,980.—Reuters