Copper edged higher on Tuesday but was still near a seven-month low reached in the previous session as escalating US-China trade tensions raised concerns over demand.

Asian shares fell as sentiment remained fragile in the face of tense trade relations between the United States and other major economies, with investors braced for another potentially rocky day for Chinese markets.

Three-month copper on the London Metal Exchange rose 0.3 per cent to $6,540 a tonne by 0415 GMT, after hitting its lowest since December 5 at $6,519 a tonne on Monday. The most-traded copper contract on the Shanghai Futures Exchange slid 0.1 per cent to 51,290 yuan ($7,656.71) a tonne.

“It is fundamentals as well as macro-economic environment which are keeping pressure on copper prices,” said Meng Jie Wu, copper analyst CRU in Beijing. “Manufacturing costs are pretty high for the downstream industry.”

Trade dispute

US President Donald Trump has this year sought to renegotiate some of the United States’ trading relationships, in particular with China. He has imposed tariffs on some imports, in turn sparking retaliatory action by other countries, raising fears of a global trade war.

Growth in China's manufacturing sector cooled slightly in June as firms faced rising input costs and a decline in export orders amid an escalating trade dispute with the United States, a private survey showed on Monday. China accounts for nearly half of global copper consumption, estimated this year at around 24 million tonnes.

China money

Monetary easing in China is expected to help support industrial metals. China's central bank in April had unexpectedly cut the reserve requirement ratios (RRR) for most banks, in a move that was earlier and more aggressive than expected, highlighting concerns over liquidity.

The dollar eased marginally against its peers on Tuesday, as the euro steadied after partners in Germany's coalition settled a row over migration that had threatened to topple Chancellor Angela Merkel's government.

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