Copper heads for weekly rise despite Mideast pullback

Copper was set to end the week higher despite coming off midweek highs, with an escalation in the Middle East war worsening inflation fears and weighing on the macroeconomic outlook for the global economy. Benchmark three-month copper on the London Metal Exchange held firm, adding 0.35% at $13,642.50 a metric ton by 0700 GMT. The most-traded copper contract on the Shanghai Futures Exchange fell 1.19% at 104,750 yuan ($15,461.03) a ton. Prices are up 0.88% on the LME and 1.6% on the SHFE since the start of the week, but down from their midweek peaks when the metal rallied, supported by demand hopes, pressure on inventories, and supply concerns. "The spike in oil and dollar brought a broad-based risk-off... worried about macro risk, bulls stepped back," Sandeep Daga, head of research at Metal Intelligence Centre, said. Markets are worried that higher oil prices will lead to higher inflation and force policymakers to hike interest rates, which could dampen demand for commodities such as copper by weighing on economic activity. Earlier support from fears of a supply shortage and perceived good demand from China faded a little. The Yangshan copper premium , a gauge of interest in importing metal to the largest consumer China, came off a multi-year high in the previous session. And on the supply side, available stocks in LME-registered warehouses were stable on Thursday for the first time since a spree of warrant cancellations - which show metal marked for withdrawal - kicked off two weeks ago. "After consecutive days of withdrawal requests, LME warehouses reported a re-warranting yesterday. This cautioned buyers," Daga said. Among other LME metals, aluminium lost 0.39%, zinc was little changed, up only 0.04%, lead dipped 0.32%, nickel gained 1.06% and tin gained 0.5%. Elsewhere on SHFE, aluminium dipped 0.26%, zinc dipped 0.12%, lead lost 0.82%, nickel gained 1.03% and tin lost 0.84%.