Copper futures retreated on light Chinese selling on Friday, a day after rocketing more than 3 percent to a 16-year peak as a weaker US dollar attracted funds to buy the industrial metal as an alternative investment. Copper for three-month delivery on the London Metal Exchange Copper, which rose about 35 percent in value last year, remained within sight of its all-time record of $3,280 a tonne in January 1989.

It was trading at $3,201/$3,208 a tonne, down about 0.5 percent from the 16-year high of $3,224.50 struck late on Thursday, but up on its previous peak of $3,175. "It was funds buying in a few volumes," said a Tokyo-based trader, referring to Thursday's high.

"Now, we can see some Chinese selling." A weaker US currency has encouraged overseas investors to buy dollar-denominated copper. The dollar slipped on Thursday as gains inspired by strong US jobless claims proved short-lived.

US Federal Reserve Chairman Alan Greenspan, in a second day of congressional testimony, reiterated that US interest rates remain "fairly low" a signal that they will keep rising. The dollar was trading at around $1.3065 against the euro, near late New York levels.

It was also little changed against the Japanese yen, at 105.46 yen. Adding strength to the copper price on Thursday, global LME stocks fell for the first time in several days. Warehouse inventories dipped 150 tonnes to 55,950 tonnes on Thursday, about 18 percent what they were a year ago.

Copyright Reuters, 2005