Copper heads for weekly rise despite Mideast pullback

Copper was set to end the week higher despite coming off mid-week 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 CMCU3 on the London Metal Exchange held firm, adding 0.11% at $13,609.5 a metric ton by 0300 GMT. The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 fell 1.4% at 104,530 yuan ($15,426.51) a ton.

Prices are up 0.63% on the LME and 1.39% 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.

Brent crude LCOc1 ticked above $100 a barrel for the first time since May after Yemen's Iran-aligned Houthis struck two Saudi oil tankers in the Red Sea.

The dollar ticked up, making commodities denominated in the currency more expensive for those using other currencies.

Non-yielding gold fell more than 2% after inflation fears from the conflict raised bets on higher interest rates, which can weigh on commodities by dampening economic growth.

Among other LME metals, aluminium CMAL3 lost 0.53%, zinc CMZN3 dipped 0.32%, lead CMPB3 lost 0.45%, nickel CMNI3 was little changed, up only 0.04%, and tin CMSN3 dipped 0.33%.

Elsewhere on SHFE, aluminium SAFcv1 lost 0.54%, zinc SZNcv1 lost 0.48%, lead SPBcv1 lost 1.01%, nickel SNIcv1 dipped 0.13% and tin SSNcv1 dropped 1.75%.

Recent developments in the Middle East have weighed on the demand outlook and on copper prices, with elevated prices pulling some buyers out of the market.