(Updates prices, adds comments)
Feb 16 (Reuters) - Copper prices slipped in holiday-thinned trade on Tuesday as the U.S. dollar pared losses, but the metal hovered near 2012 highs on the back of firm demand prospects and a tight supply outlook.
Benchmark copper on the London Metal Exchange dropped 0.1% to $8,384.50 by 0709 GMT, after earlier hitting $8,437, its strongest since May 2012.
The metal, often used as a gauge for global economic health, had risen as much as 9.4% from its Feb. 2 low of $7,712 a tonne.
The dollar index hit a three-week low earlier in the day, boosting the appeal of greenback-priced metals, but it later trimmed losses to trade at 90.36 versus a day low of 90.229.
“I wouldn’t read too much into it though as the market is drifting due to extremely thin volumes,” said Anna Stablum, a commodity trader at Marex Spectron in Singapore, commenting on copper’s modest pullback.
“Overall the market is underpinned by optimism of more stimulus and a strong return of demand once the Chinese come back.”
Trading remained light with mainland Chinese markets closed for the Lunar New Year holiday until Wednesday.
* Mining giant BHP Group said in its commodity outlook issued following first-half results that “long term (copper) demand from traditional end–uses is expected to be solid, while broad exposure to the electrification mega–trend offers attractive upside”.
* For calendar 2021, Chinese demand is expected to be roughly 5% higher than in calendar 2019, but supply constraints remain in pandemic-hit Chile and Peru, the world’s two largest exporters of primary copper, BHP said.
* Aluminium slipped 0.2% to $2,078.50 a tonne, after hitting an eight-week high of $2,095 on Monday.
* Nickel was little changed at $18,625 a tonne, still supported after hitting its best level since September 2019 on Monday.
* Tin gained 0.7% to $24,550 a tonne, but zinc dropped 0.3% to $2,834.50 a tonne and lead dipped 0.3% to $2,117.50 a tonne. (Reporting by Enrico Dela Cruz in Manila; Editing by Vinay Dwivedi and Devika Syamnath)