Copper drifts as interest rate fears weigh on demand expectations

Among LME metals, aluminium CMAL3 lost 0.45%, zinc CMZN3 dipped 0.24%, lead CMPB3 slipped 0.18%, nickel CMNI3 eased 0.16% and tin CMSN3 was little changed, up only 0.04%.

Among SHFE metals, aluminium SAFcv1 was little changed, up only 0.02%, zinc SZNcv1 ticked 0.13% higher, lead SPBcv1 lost 0.82%, nickel SNIcv1 lost 0.79% and tin SSNcv1 dipped 0.25%.

Elsewhere, oil nudged lower after Iran said it was open to diplomacy, providing some reassurance after an Iranian official on Wednesday said that Iran and the U.S. were still far apart in peace talks.

The war has pushed energy prices higher, raising inflation and the spectre of higher-for-longer interest rates which can dampen demand for growth-dependent commodities by stifling economic growth.

Copper was boosted this week by strong China buying ahead of national holidays there, before dollar gains and profit-taking pushed the red metal off levels near its record highs.

The Yangshan copper premium SMM-CUYP-CN -- a gauge of China's appetite for imported copper -- was flat on Wednesday at $117 a ton. That is 62.5% higher than at the start of the month.

Copper floated lower on Thursday after the release of hotter-than-expected U.S. economic data the previous day raised fears of higher-for-longer interest rates that could compress demand for the red metal.

Benchmark three-month copper CMCU3 on the London Metal Exchange was down 0.22% at $14,586.5 a metric ton by 0317 GMT. The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 fell 0.52% to 110,750 yuan ($16,494.89) a ton.

Interest rate expectations were boosted by economic data that showed U.S. business activity rose to a more than five-year high in September, putting pressure on copper prices, analysts at Chinese broker Galaxy Futures said.