(Reuters) - London copper eased on Tuesday after gaining for three sessions with holidays in top consumer China this week keeping trade thin, although an unexpected glimmer of expansion from the U.S. manufacturing sector cushioned prices.
Copper began the fourth quarter on a steady footing this week after rallying 7.8 percent in September, when the European Central Bank and the U.S. Federal Reserve unleashed measures to buttress their faltering economies.
Still, an ongoing growth slowdown in China ahead of October's once in a decade leadership transition has kept traders cautious and consumers from locking in large buys, leading to expectations of a smaller fourth quarter uptick than usual.
"Last month was quite good for base metals but for the wrong reasons -- more free money from the Federal Reserve," said Matt Fusarelli, an analyst at Australia-based consultancy AME Group.
"For copper we are not expecting any rounds of restocking in the fourth quarter or another jump in prices ... We expect the (Chinese) government to be treading softly and we don't see any bold moves in the near term."
Three-month copper on the London Metal Exchange had eased by 0.28 percent to $8,276 a metric ton (1.1023 tons) by 12 am EDT, partly reversing small gains from the previous session when copper closed up 1 percent.
Copper ended the third quarter little changed from the second, although it is now up around 9 percent so far this year.
Factory activity in China contracted in September two indicators showed this week in a sign the world's No. 2 economy lost momentum for a seventh consecutive quarter.
China, a crucial engine of global growth, accounted for around 40 percent of refined copper demand last year.
The Shanghai Futures Exchange is closed for holidays this week and volume has been very low, with less than 150 lots of LME copper traded on the LME so far.
U.S. manufacturing unexpectedly expanded in September for the first time since May as new orders and employment picked up, but the pace of growth showed the economy was still stuck in a slow recovery, data showed on Monday [ID:nL1E8L181O]
The slowdown in global growth has led several large mining companies to review or shelve upcoming projects in recent months such as BHP Billiton's (BHP.AX) (BLT.L) decision to hold back development of its Olympic Dam copper and uranium mine in South Australia.
Supporting metals, the euro edged higher and held above a three-week low against the dollar on Tuesday. A weaker dollar makes commodities cheaper for holders of other currencies.
(Reporting by Melanie Burton; Editing by Ed Davies)
Copyright 2012 Thomson Reuters. All rights reserved.