Updated from 12:03 p.m. EDT

Freeport-McMoRan Copper & Gold ( FCX) continued to seesaw in late afternoon trading Tuesday, as the benefits of its blockbuster second-quarter earnings battled weakness in the underlying metals market.

After trading as high as $53.22 early in the session, Freeport-McMoRan shares dipped into negative territory in line with gold futures, but then rallied late in the day and were recently up 0.4% at $51.78.

Freeport reported earnings of $1.74 a share for the second quarter vs. 91 cents in the same period a year ago on high prices of copper and gold. Revenue was $1.4 billion vs. $900 million a year before. Analysts polled by Thomson First Call expected earnings of $1.45 a share and revenue of $1.3 billion.

The company says it sold copper at an average price of $3.33 a pound for the quarter vs. $1.53 a year before. The average gold price realized was $613.77 an ounce, compared to $428.23 a year earlier. Results were, however, negatively affected by weather-related delays in shipping as well as the presence of an ore body with unusually high clay content, says Kathleen Quirk, company CFO.

For the remaining half year, the company expects to process higher-quality ore, thus increasing throughput of metal and reducing overall unit costs and increasing operating cash flow.

"Our company has no need to retain significant cash balances," says Freeport president Richard Adkerson, noting the firm's low net debt of less than $1 billion and history of returning excess cash to shareholders via stock buybacks or higher dividends.

In metals, copper lost 2.85 cents to close at $3.60 a pound after rallying earlier in the day on continued concerns over supply, with London Metal Exchange Stocks again reportedly lower at 93,850 metric tons, down 250 tons, and the possibility of industrial action at Chile's massive Escondida copper mine never far from market observers' thoughts.

"When prices are this strong, industrial companies will face this type of thing, because workers want a piece of the action," says Kona Haque, senior commodities economist at the Economist Intelligence Unit, who notes that the fundamentals for the copper market look set to remain strong through the end of 2007.

Gold futures, however, dropped $21.90, or 3.2%, to end the day at $630.00 an ounce in trading on the Comex division of the New York Mercantile Exchange, or Nymex, as investors' concerns over the Mideast conflict continued to wane.

"Positive news out of the Middle East that Israel might be wrapping up their military actions in Lebanon by the end of this week caused some large-scale long liquidation as nervous investors exited positions," observes a daily report by London-based Standard Bank.

The bullion exchange-traded funds iShares Comex Gold Trust ( IAU), streetTRACKS Gold Shares ( GLD) and iShares Silver Trust ( SLV) were trading down Tuesday afternoon.

Shares of Newmont Mining ( NEM) and Barrick Gold ( ABX) were trading slightly down.

Like Freeport, Newmont maintains a relatively low debt balance, which is not the case for Barrick. As such, its price may be more sensitive to future rate hikes from the Federal Reserve.

Palladium prices fell $8 to close at $313.20 an ounce on the Nymex, and that was translating into lower share prices for North American Palladium ( PAL) and Stillwater Mining ( SWC), both down about 5%.

"Palladium may be more vulnerable to negative sentiments than other metals," states a new report from Virtual Metals a London-based specialty consulting firm. It notes that investors may have lost interest in the metal.

Comex silver futures closed down 56.5 cents to $10.47 an ounce.

Cocoa continued Monday's drop trading down another $61 to $1,497 per metric ton on the New York Board of Trade. The exchange increased margin requirements starting Wednesday, which could have a further dampening effect on prices if speculators are forced to sell holdings to raise the required cash.