METALS-Copper edges higher in China holiday-thinned trade

NEW DELHI, Jan 25 (Reuters) - Copper prices inched higher on Wednesday, supported by improving demand prospects in top consumer China and a soft U.S. dollar, even as trading remained muted during the Chinese Lunar New Year holidays.

Three-month copper on the London Metal Exchange was up 0.48% at $9,359.50 a tonne, as of 0252 GMT.

The euro held near a nine-month peak against the dollar, as traders weighed a rosier growth outlook for the euro zone against growing signs of a looming U.S. recession.

Against a basket of currencies, the U.S. dollar index eked out a 0.01% gain to 101.92, not far from last week's nearly eight-month low of 101.51.

"The official move away from zero (COVID) tolerance policies in China (on Jan. 8) has fast-tracked recovery expectations and boosted investor speculative sentiment," said Natalie Scott-Gray, a senior metals analyst at StoneX.

"In addition to this, expectation that interest rates will moderate over the year (and deaccelerate in pace) has kept the U.S. dollar's gains at bay."

With the Lunar New Year holidays in China, investor focus has shifted to market fundamentals, said Scott-Gray, adding that copper found more support from supply fears in South America, particularly in Peru.

Social unrest in Peru, the world's second-biggest copper producer, has caused apprehension of disruption to supplies.

In other metals, aluminium gained 0.09% to $2,653 a tonne, lead was up 0.19% at $2,130 and zinc fell 0.15% to $3,424.

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