NEW YORK/LONDON, June 21 (Reuters) - Copper prices rose sharply but gave back some gains on Monday as China's pledge to make the yuan more flexible raised hopes for stronger demand growth from the world's largest consumer of industrial metals.
As trading progressed, however, industrial metals came off their highs on worries that China may do little to its currency that could be meaningful for commodities in the long term, analysts said.
Popular thinking was that China would revalue the yuan upward by about 2 to 3 percent.
"That's why people are a bit cautious," said Wayne Atwell, managing director at New York-based investment bank Casimir Capital LP. "If it's 10 percent, then it's a different story altogether."
Benchmark lead CMPB3 on the London Metal Exchange touched $1,837.75 a tonne, its highest since May 28, before closing at $1,833, up $88. Tin CMSN3 reached $18,250, matching a high on May 28, before closing at $17,800/17,900 from $17,450.
Three-month copper CMCU3 hit a session high of $6,729.75 a tonne. The industrial metal, often used as a gauge of economic activity, closed at $6,595 a tonne, up from $6,435 a tonne on Friday.
U.S. COMEX copper futures for July delivery HGN0 settled up 5.80 cents, or 2 percent, at $2.9420 an ounce.
China's move to make its currency more flexible should be mildly bullish for many commodities by boosting its purchasing power and possibly increasing its imports of copper and metals.
"Everyone's treating it as good news. It does undeniably make their imports stronger," said Alex Heath, head of base metals at London's RBC Capital Markets. Analysts said the mood was tempered by news that China's central bank had ruled out a one-off revaluation of the yuan.
"We need to see confirmation ... by their activity in currency markets," said Robin Bhar, an analyst at Credit Agricole.
Expectations of a slowdown in demand as summer begins in the northern hemisphere also tempered sentiment.
"We're still going into summer. The likelihood is business will slow and some of the heat will come out of the pricing," Heath said.
Aluminium closed at $1,963 a tonne from $1,945 at the close on Friday. Earlier it touched a session high of $2,019.
"China is the highest cost producer for some metals such as nickel and zinc. The one that sticks out the most is aluminium," Bhar said.
China is the world's largest producer and consumer of aluminium, used in transport and packaging. Production costs have risen recently because of soaring electricity prices.
Power is estimated by analysts to account for about 45 percent of aluminium smelting costs in China.
Stainless ingredient nickel CMNI3 rose to $19,850 a tonne from $19,595 at the close on Friday. Zinc MZN3 was at $1,775, up from $1,725 a tonne. Slightly weighing on the prevalent optimistic mood was news that China's refined copper imports fell 9.7 percent in May from April to 279,690 tonnes, but traders and analysts said the fall had been expected.