Economist Shayne Heffernan expects to see a Copper rally in late 2012 or early 2013 as inflation drives prices higher.

London copper rebounded on Thursday from two-week lows hit in the previous session, as traders betting on fourth quarter recovery in top metals consumer China bought into the weakness, although persistent concerns over European sovereign debt capped gains.

Three-month copper on the London Metal exchange had risen 0.67 % to $8,1475 a tonne by 0127 GMT, reversing losses from the previous session when it hit two-week lows of $8,082. Lower prices lured buyers on expectation of growth-supportive measures in China. Aluminum and tin also advanced.

Prices, which were down by more than 10 percent on the year in June have since rallied to log gains of 7.5 percent for the year so far, after the U.S. Federal Reserve and the European Central Bank announced stimulus measures earlier this month.

The most-traded January copper contract on the Shanghai Futures Exchange slipped 0.71 percent to 58,730 yuan ($9,300) a tonne.

Underlining the slowdown in China’s economic growth, industrial profits fell 6.2 percent to 381.2 billion yuan ($60.49 billion) in August from a year ago, the government said on Thursday, quickening the pace of a drop in earnings this year.

China accounts for around 40 percent of global metals demand.

The biggest manufacturers in Japan, which ranks fourth globally among copper consumers, grew more pessimistic this quarter as China’s slowdown and Europe’s debt crisis sapped exports, according to a Bloomberg survey. The BoJ will say on October 1 that business confidence in its Tankan survey fell to minus 4, the fourth quarter pessimists outnumbered optimists, it showed.

Copper stockpiles monitored by the LME rose for a third day to 220,525 tonnes, daily exchange figures showed. Orders to withdraw metal from warehouses slid 2.5 per cent to 39,425 tonnes.

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