Copper climbs on China factory data, heads for third-straight monthly gain

Sept 30 (Reuters) - Copper ticked higher on Wednesday and was set to post its third monthly gain in a row as factory activity in China returned to growth, although trading remained subdued ahead of a week-long holiday in the world's biggest metals consumer.

Benchmark three-month copper on the London Metal Exchange was up 0.2% to $14,465 per metric ton as of 0930 GMT and on course for a monthly rise of around 1.2%. It has gained around 8.2% in the third quarter, having hit a record high of $14,875 on September 10.

Activity in China's copper-intensive manufacturing sector improved in September, with the official purchasing managers' index rising to 50.1 from 49.8 in August. A private RatingDog survey showed factory activity expanded at a faster pace: its PMI measure rose to a five-month high of 52.1 from 51.5.

Pre-holiday demand continued to drain copper in Shanghai Futures Exchange warehouses, as stocks declined by 17.8% from last week to 38,744 tons, the lowest since January 2024.

The ShFE will close from Thursday for China's National Day holiday, reopening on October 8.

Copper is finding support from expectations of a relatively tight market balance over the coming quarters, said ING commodities strategist Ewa Manthey.

"While uncertainty around global growth and trade policy remains a consideration, structural demand trends and constrained supply growth should help keep prices well supported through Q4," she added.

The domestic premium for physical copper in China has slipped from last week's peak of 1,375 yuan ($205) a ton to 1,050 yuan a ton, but the Yangshan premium -- a gauge of appetite for imported copper -- rose slightly to $119 a ton.

Elsewhere, aluminium edged up 0.1% to $3,217 a ton, zinc fell 0.3% to $3,856.50, lead lost 0.3% to $1,893, nickel climbed 0.5% to $16,030 and tin dipped 0.1% to $54,005.

($1 = 6.7045 Chinese yuan renminbi)