* China mortgage incentives to shore up commodities demand
* Coming up: euro zone Markit services PMI Jan at 0900 GMT (Adds comment, detail; updates prices)
By Melanie Burton
MELBOURNE, Feb 3 (Reuters) - London copper climbed on Wednesday, edging back towards a four-week high struck in the previous session, buoyed by positive news out of top metals user China and as traders continued to shut out short positions ahead of an upcoming holiday.
Activity in China’s services sector expanded at its fastest pace in six months in January, a private survey showed, helping to offset weakness in the vast manufacturing sector that has weighed on the world’s second-largest economy.
Copper prices have been building a base above $4,500 a tonne after hitting a six-year low in mid-January amid slowing Chinese demand. Trade is expected to wane ahead of the Lunar New Year, which will shut China for a week from Monday.
Helping to revive commodities demand, China said it would reduce the minimum downpayment required for first- and second-time home buyers in most cities, a move aimed at clearing a housing glut in regions outside major centres.
“The relaxation on mortgage down payment for most cities in China will continue to fuel property sales ... and investment,” said Argonaut Securities in a note.
“The recovery in property investment is a positive catalyst for commodity demand.”
China’s construction sector accounts for 25 percent of the country’s copper demand, 35 percent of its aluminium demand and 54 percent of its demand for steel.
London copper had risen 0.5 percent to $4,571.50 a tonne by 0700 GMT, having closed a tad softer the session before, when prices surged to $4,628 a tonne, the most expensive since Jan. 7.
Shanghai Futures Exchange copper climbed 0.3 percent to 35,650 yuan ($5,418) a tonne.
Reflecting tough times for metals producers, Horsehead Holding Corp, a large U.S. zinc producer, filed for Chapter 11 bankruptcy on Tuesday due to a slump in metals prices and a shortage of cash.
Global interest rates are likely to go even lower before they rise as financial market volatility and the spectre of deflation raise fresh doubts about central banks’ ability to fulfil their mandates, policymakers and economists said.
Japan’s JX Holdings Inc said on Wednesday its Caserones copper mine in Chile was running at about a 70-percent utilisation rate in January, missing its earlier target of full utilisation throughout the month.
Dragging on metals, oil prices have fallen about 70 percent in the past 18 months, largely due to a growing supply glut but also exacerbated by cooling economic growth in China and other emerging markets.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Most active ShFE nickel
Three month LME tin
Most active ShFE tin ($1 = 6.5797 Chinese yuan renminbi) ($1 = 6.5798 Chinese yuan renminbi) (Reporting by Melanie Burton; Editing by Joseph Radford and Richard Pullin)