Copper retreats from 7-week peak after China rate cut
"It's disappointing, I would have expected prices to move more than they did. The rate cut is showing the readiness of the Chinese government to fight against the slowdown," said Eugen Weinberg, head of commodity research at Commerzbank in Frankfurt.
Three-month copper on the London Metal Exchange climbed to a session high of \$5,960 a tonne, the highest since Jan. 13, before paring gains to trade at \$5,885 in official midday rings, down 0.2 percent.
Prices closed little changed on Friday after the metal logged its largest monthly advance in more than two years.
Gains on Monday were modest as analysts expressed concern that Chinese authorities may have taken action because the economy was in worse shape than expected.
"The benchmark rate cut... suggests to us that growth momentum may have slowed significantly in February," Nomura economist Yang Zhao said in a note.
China's central bank cut interest rates on Saturday, ahead of factory health readings that showed some worrying signs on growth.
Activity in China's factory sector edged up to a seven-month high in February but export orders shrank and deflationary pressures persisted, a private business survey showed on Monday.
UBS raised its 12-month copper forecast to \$6,700 a tonne from \$5,500 due to growing challenges to mine supply.
"The copper story was more supply-driven. I don't think that demand angle is yet to kick in," said analyst Dominic Schnider of UBS Wealth Management in Hong Kong.
The most-traded May copper contract on the Shanghai Futures Exchange struck 43,280 yuan (\$6,899), its highest since Jan. 12, before closing up 1.2 percent at 43,200 yuan.
Hedge funds and money managers nearly eliminated their bearish positions in copper futures and options during the week to Feb. 24, data from the US Commodity Futures Trading Commission showed on Friday.
Aluminium pared initial gains of about 1 percent to trade down 0.3 percent in rings at \$1,810.50 a tonne, while zinc pared gains to trade up just 0.1 percent at \$2,067.
Lead recovered from more-than-four-year lows plumbed on Friday to trade up 0.6 percent at \$1,738 a tonne.
Lead prices have fallen due to ample mine supply and slowing growth in battery demand for electric bicycles.
Nickel was last bid down 0.9 percent in rings at \$13,950 a tonne, having eariler hit tis lowest since June 2014 at \$13,900, while tin was last bid down 1.25 at \$17,725.