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LONDON - Copper prices rose on Monday as a liquidity injection by China's central bank demonstrated support for the Chinese economy and helped the metal recover from a five-month low hit last week.
Benchmark copper on the London Metal Exchange (LME) was up 1% at $8,333 a tonne in official open-outcry trading.
The metal had touched $8,136.50 on Friday for its lowest since Nov. 30, pressured by concerns over demand from top consumer China and selling by momentum-based funds.
"We are seeing a marginal rebound in base metal sentiment following last week's sustained weakness," said Arthur Parish, metals associate at SP Angel.
"Several signs of optimism are developing from China, with today's PBOC liquidity injection likely driving the short-term recovery in prices. Copper demand remains muted and inventory levels are high."
Along with the central bank's liquidity injection, there is also some "bargain hunting" after last week's weakness in metals, said Julius Baer analyst Carsten Menke.
The U.S. dollar, meanwhile, fell from a five-week high, making dollar-denominated metals more attractive to buyers holding other currencies.
China is due to report monthly industrial production and retail sales on Tuesday, providing evidence of whether demand is finally picking up after the lifting of COVID-19 curbs early this year.
On the supply side, a copper mine in Tibet stopped production after an accident on Sunday, adding further support for the market. China is likely to import more refined copper later this year, according to a senior analyst at trading house Trafigura.
LME aluminium was up 1.6% at $2,266 a tonne in official activity after on-warrant stocks in the LME-registered warehouses declined to a three-month low of 373,025 tonnes.
In other metals, zinc rose 0.9% to $2,572 a tonne, lead was flat at $2,076, tin gained 1.3% to $25,150 and nickel was down 0.3% at $22,150.
(Reporting by Polina Devitt in London; Additional reporting by Enrico Dela Cruz in Manila Editing by David Goodman)