Bareksa.com - London copper steadied on Wednesday after hitting a near three-month peak the previous day with prices supported by improving demand in top consumer China, while London nickel firmed as unrest at a New Caledonian mine kept supply threats in focus.

A moderate recovery in China's manufacturing health according to a private sector survey earlier this month suggests factories are gaining steam while utilisation rates at China's cable makers - a large user of copper - are also picking up, said Sijin Cheng, analyst at Barclays in Singapore.

"The demand picture is still a step down from last year, but compared to Q1 I think it's a pretty obvious improvement," she added.

"Given the market does feel tight on the physical side, I think that a further pick up in numbers on the macro side will fuel sentiment."

China's factory sector turned in its best performance in five months in May, a preliminary HSBC survey showed on Thursday, though overall manufacturing growth still contracted slightly in a suggestion that the outlook remains murky. China's official PMI is due out at the weekend.

Three month copper on the London Metal Exchange (LME) was flat at $6,932 a tonne by 0144 GMT, after closing little changed in the previous session. Prices hit $6,966 a tonne on Tuesday, the highest in almost three months.

Reflecting a shortage of available physical supply that is underpinning the market, cash prices soared to $93 above the benchmark contract this week, the highest in more than two years.

The most-traded August copper contract on the Shanghai Futures Exchange slipped by 0.2 percent to 48,840 yuan ($7,800) a tonne.

Economic growth in the world's largest economy also brightened, with orders for long-lasting U.S. manufactured goods unexpectedly rising in April and consumer confidence perking up in May.

In other metals, LME nickel climbed 0.5 percent to $19,643 a tonne, reversing small losses in the previous session. Nickel is up by more than 40 percent this year after an Indonesian ban on ore exports caused prices to double and forced stainless steel makers to scramble for material.

Keeping forecasts of a supply deficit in focus were escalating tensions at a New Caledonian nickel plant shut earlier this month. Rioters torched vehicles, equipment and buildings at Vale's nickel mine in the French Pacific territory over the weekend, as anger boiled over about a chemical spill in a local river.

"The fact that the market ended the day in the red is a sign that the current bullish supports for nickel in recent weeks now seem to be fully priced in and the price seems set for further consolidation for some time to come," London-based broker Triland said in a note.

"The technicals and fundamentals of the market are still positive however and we would expect the market to break to the upside when the consolidation ends."

In other news, BHP Billiton, the world's largest diversified mining company, may cut jobs at its Worsley Alumina operations in Australia after completing a review of the business, the company said on Tuesday. (Source : Reuters)