(Updates prices, adds U.S. data)
LONDON, Feb 1 (Reuters) - Copper slipped on Monday as manufacturing data from top consumer China raised the prospect of slowing demand growth, while a higher dollar prompted funds to cut bets on higher prices, though losses were capped by historically low inventories.
Benchmark copper on the London Metal Exchange was down 0.7% at $7,801 a tonne at 1706 GMT. Prices of the industrial metal have fallen more than 5% since hitting an eight-year high of $8,238 last month.
“There was a fair amount of profit-taking on long positions earlier, the dollar is going up and doubts about Chinese demand are creeping in,” one metals trader said.
“But the plus is inventories.”
MANUFACTURING: China’s January factory activity grew at the slowest pace in five months, hit by a wave of domestic coronavirus infections.
China’s central bank on Friday dismissed rumours that it had raised the interest rate on its standing loan facility, easing worries about tighter credit and providing some price support.
UNITED STATES: The drop in the Institute for Supply Management’s (ISM) index of national factory activity to 58.7 last month from 60.5 in December undermined sentiment and triggered a bout of selling in industrial metals markets.
DOLLAR: A stronger U.S. currency makes dollar-denominated metals more expensive for holders of other currencies, which could weigh on demand and prices.
INVENTORIES: Copper stocks in LME-registered warehouses, at 74,275 tonnes MCUSTX-TOTAL, are close to last September's 15-year trough. Cancelled warrants - metal earmarked for delivery - at 33% suggest more metal is due to leave.
Concern about availability on the LME market has created a premium for cash copper over the three-month contract, currently at $6 a tonne.
TIN: Stocks of tin CMSNSTX-TOTAL in LME-registered warehouses, at 820 tonnes, are fast approaching the record lows of May 2019.
The premium for cash tin over the three-month contract is above $400 a tonne.
Three-month tin was up 1.3% at $23,080.
OTHER METALS: Aluminium fell 0.4% to $1,970 a tonne, zinc was down 0.1% at $2,576, lead added 0.1% to $2,027 and nickel was up 1% at $17,860. (Reporting by Pratima Desai Editing by Kirsten Donovan, David Goodman and Paul Simao)