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Copper prices rose as the market recovered from last week's slump, aided by news Freeport-McMoRan will acquire Phelps Dodge for approximately 25.9 bln usd in cash and shares.

However, with stockpiles still rising and recent US economic data providing fresh cause for concern over growth prospects in the world's largest economy, analysts warned copper's gains might be limited.

At 1.15 pm, LME copper for three-month delivery rose to 6,900.00 usd a tonne against 6,800.00 usd at the close yesterday, and aluminium climbed to 2,647.50 usd against 2,625.00.

Other base metals were also higher.

Nickel rose to 30,400.00 usd against 29,900.00 usd, lead climbed to 1,512.50 usd against 1,484.00 usd, zinc was up at 4,145.00 usd against 4,025.00 usd, while tin was up at 9,850.00 against 9,700.00 usd.

'The big story of the day giving the copper complex somewhat of a boost is news that Freeport-McMoRan Copper & Gold has agreed to buy Phelps Dodge Corp. for 25.9 bln in cash and stock,' said Man Financial analyst Ed Meir.

The merger will create the world's largest publicly traded copper company and represents the world's biggest mining takeover.

Meir added, however, that 'as this news (merger) wears off, we expect the market to focus once again on rising stocks and a slowing US macro environment'.

The LME said today copper stocks monitored in its warehouse rose by another 2,050 tonnes to total 158,025 tonnes. LME copper stocks have now risen 44 pct from a recent low of 109,600 tonnes.

'Copper looks like it will be in a small surplus next year and we expect more downward pressure on prices. We see prices closer to 6,000 than 7,000 over the next few months,' said Adam Rowley, an analyst at Macquarie Research.

Copper closed slightly lower on Friday after data showing a very sharp decline in new home construction in the US sparked concerns that slowing US growth could crimp demand for metals.

However UBS Investment Bank analyst Robin Bhar said the metal's performance was 'better than expected given the negative macro (US and Chinese economy) and micro (rising stocks, easing spreads) background'.