Base metals were in negative territory on Monday morning on the LME, mostly consolidating after last week's rally. Investors were in a cautious mood ahead of key data releases and central bank meetings this week, traders said.
Base metals surged to multi-week and multi-month highs last week but the rallies reflected interest from funds and CTAs and not a fundamental shift in markets, they added.
"The metals need to consolidate now after the quick recent gains," broker Triland noted.
The main focus of the market this week is the US Federal Open Market Committee (FOMC) meeting. While most do not believe the Fed's policy board will lift rates, investors will scrutinise the committee's statement on Wednesday to assess its stance on the US economy and for any hints on the timing of its next rate rise.
As well, weighing on the base metals this morning are falling oil prices and weaker equities, market participants noted. Spot Brent crude was last softer at $44.46 per barrel after ending last week with considerable gains.
The economic agenda today is light, with Japan's services PPI coming in unchanged at 0.2 percent while the German Ifo business climate disappointed at 106.6. From the US, new home sales are scheduled for release later.
"As always in very nervous markets that have temporarily got a little disconnected from the underlying physical market, it will also be news that will drive short-term moves and will need careful watching," Malcolm Freeman of Kingdom Futures said.
In the metals, copper is fluctuating around $5,000 - it recently traded at $4,972 per tonne, down $59 on Friday's close.
More than 6,000 lots have changed hands on Select so far. The cash/threes spread remains in a backwardation - it was last at $12.25.
"While we believe that correction potential has built up in the short term, we see the price well-supported in the medium to long term," Commerzbank noted.
"Disappointing economic data - the US economy appears to have made a weak start to the year - could continue to take the wind out of the sails of the metal price upswing," the bank added.
In today's warehouse data, copper stocks rose a net 4,600 tonnes to 152,400 tonnes and cancelled warrants climbed 2,727 tonnes to 27,650 tonnes.
Aluminium, which hit its highest since July last year on Friday, was last $19.50 lower at $1,633. Stocks fell 6,200 tonnes to 2,669,700 tonnes and cancelled warrants were down 6,250 tonnes to 1,226,325 tonnes.
Nickel at $9,010 was down $80. Stocks were down 1,926 tonnes to 418,998 tonnes.
Zinc was $37 lower at $1,872 after stocks climbed 1,875 tonnes to 409,575 tonnes and lead was down $22 at $1,769 - stocks climbed 50 tonnes to 175,325 tonnes but cancelled warrants were up 7,775 tonnes to 68,050 tonnes.
Tin recently traded at $17,235, down $215. Stocks dropped 50 tonnes to 4,715 tonnes. Steel billet, cobalt and molybdenum were neglected.
(Editing by Mark Shaw)