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Copper, aluminium rebound as dollar rally pauses; growth fears cap gains

London copper and aluminium prices rebounded on Tuesday, helped by a slight pullback in the U.S. dollar, although a spike in COVID-19 cases in Beijing and global slowdown worries weighed on investor sentiment.

Three-month copper on the London Metal Exchange rose 0.8% to $9,365.50 a tonne, as of 0705 GMT, while aluminium was up 0.3% at $2,635, after hitting its lowest since Dec. 15 on Monday.

The most-traded July aluminium contract in Shanghai ended daytime trading 1% lower at 20,005 yuan ($2,976.93) a tonne, after falling to its lowest since May 11 earlier in the session.

Offering some respite, the dollar rally stalled as the U.S. currency fell 0.2% against its rivals, making greenback-denominated metals less expensive for buyers using other currencies. [USD/]

“Concerns of weaker economic growth as central banks hike rates weighed on sentiment in the base metals market,” commodity strategists at ANZ said in a note.

“Following the easing of some restrictions in recent weeks, the market was reminded of the rollercoaster ride it is on when authorities in Shanghai sealed a district for mass testing. These little outbreaks of COVID-19 could hinder the economic recovery and weigh on demand.”

Beijing’s authorities have launched an investigation into a 24-hour bar that they believe to be at the centre of a cluster of more than 250 COVID-19 cases in China’s capital since last week, local media reported on Tuesday.

Rising expectations that the U.S. Federal Reserve will this week raise interest rates by more than previously forecast unsettled investors.
Source: Reuters (Reporting by Brijesh Patel in Bengaluru; Editing by Sherry Jacob-Phillips, Shounak Dasgupta and Subhranshu Sahu)

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