© Reuters. Copper futures fall from 7-week high on China growth concerns

Investing.com - Copper prices fell sharply on Tuesday, one day after hitting the highest level in seven weeks as concerns over the health of China's economy dampened demand for the red metal.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

On the Comex division of the New York Mercantile Exchange, for May delivery tumbled 4.1 cents, or 1.5%, to trade at $2.657 a pound during European morning hours.

Futures were likely to find support at the $2.616, the low from February 25, and resistance at $2.718, the high from March 2.

A day earlier, copper hit $2.718, the most since January 13, before ending at $2.697, up 0.6 cents, or 0.22%.

A pair of manufacturing reports released earlier in the week painted a mixed picture of the health of China's manufacturing sector.

The final February HSBC manufacturing index published on Monday ticked up to 50.7, above the flash reading of 50.1.

In contrast, the official China's manufacturing purchasing managers' index released on Sunday showed that activity in China's factory sector contracted for a second straight month in February.

The index came in at 49.9, just above expectations for a reading of 49.7 and up slightly from a two-year low of 49.8 in January.

A reading above 50.0 indicates expansion, below indicates contraction.

China’s central bank unexpectedly cut interest rates for the second time in less than four months on Saturday, indicating that Beijing is becoming more aggressive in supporting the economy as its momentum slows and deflation risks rise.

Elsewhere on the Comex, for April delivery ticked up 20 cents, or 0.02%, to trade at $1,208.40 a troy ounce, while for May delivery dipped 6.3 cents, or 0.38% to trade at $16.38 an ounce.

The U.S. , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.1% to 95.42 early on Tuesday, after hitting a one-month high of 95.55 on Monday.

Investors turned their attention to the upcoming European Central Bank meeting on Thursday, when it was expected to announce details of its quantitative easing program.

Traders also looked ahead to the release of the latest U.S. nonfarm payrolls report on Friday, for further indications on the strength of the recovery in the labor market.

Market analysts expect the data to show that the U.S. economy added 240,000 jobs in February, slowing from a gain of 257,000 in January, while the unemployment rate was forecast to decline to 5.6% from 5.7%.

A strong U.S. nonfarm payrolls report was likely to add to speculation over when the Federal Reserve will begin to raise interest rates, while a weak number could boost gold by undermining the argument for an early rate hike.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.