METALS-Copper falls as support from US-China trade truce extension fades

By Polina Devitt

LONDON, Aug 13 (Reuters) - Copper prices reversed course to trade lower on Wednesday as support from this week's 90-day extension of the tariff truce between the U.S. and top metals consumer China faded.

Benchmark copper CMCU3 on the London Metal Exchange was down 0.4% to $9,802.50 a metric ton by 1632 GMT.

The metal, which is used in the power and construction sectors, hit $9,865 on Tuesday and Wednesday, the highest price since July 25, due to the extension of the U.S.-China trade discussions.

"After a strong session on Tuesday, base metals are taking a bit of a breather right now," said Ed Meir, an analyst at Marex.

Sets of data from China due this week may provide clearer direction for base metals as any weakness could embolden the case for economic stimulus, said Nitesh Shah, commodity strategist at WisdomTree.

China's new yuan loans contracted in July for the first time in 20 years, falling well short of analysts' forecasts. However, outstanding total social financing, used by analysts as a gauge of industrial metals demand, rose 9%, hitting the highest level since February 2024.

Suspension of production at a major lithium mine by Chinese battery giant CATL 300750.SZ earlier this week as it applied to renew its mining licence raised hopes of a broader crackdown on overcapacity in other sectors.

"China has demonstrated its determination to stem 'involution' with the halting of CATL's lithium mine. We are watching to see if China will address copper refining overcapacity through similar measures, which could lend support to prices," Shah said.

LME aluminium CMAL3 fell 0.3% to $2,612 a ton, zinc CMZN3 dropped 0.9% to $2,822.50, while lead CMPB3 slid 1.5% to $1,986. Tin CMSN3 and nickel CMNI3 were down 0.5% at $33,655 and $15,260, respectively.