UPDATE 2-LME copper up after oil's leap, Shanghai shut

(Updates prices, adds graphic)

By Nick Trevethan

SINGAPORE, June 9 (Reuters) - London copper prices extended
gains in light trading on Monday, rising after an unprecedented
spike in oil on Friday and a softer tone to the dollar.

Financial markets in Shanghai and Hong Kong were closed and
Australian players were also absent due to market holidays.

London Metal Exchange copper for delivery in three months
MCU3 rallied $50 to $8,050 a tonnes at 0703 GMT, after
gaining 2.4 percent on Friday, when crude oil surged by its
largest ever dollar amount to hit a record high of $139.12 a
barrel.

"There is a fear that oil will go haywire after the
comments from Israel and that would set off metal prices too,"
a trader in Singapore said.

"But from a fundamental perspective, not much has changed.
Demand is steady -- we are not seeing much demand destruction,
and production continues. Prices should remain robust."

Israeli Transport Minister Shaul Mofaz was quoted on Friday
in an Israeli newspaper saying that an attack on Iran looks
"unavoidable" given the apparent failure of sanctions to deny
Tehran nuclear technology with bomb-making potential.

That, along with a decline in the dollar after U.S.
payrolls showed their fifth consecutive monthly fall, lit the
touch paper under oil, which jumped as much as $11 to a record
high.

Shanghai Futures Exchange copper stocks fell 13 percent to
38,829 tonnes last week, above market expectations.

For a chart of combined exchange copper stocks, click on
the following link:
here

In addition to digesting the stock fall and rocketing oil
when they return on Tuesday, Chinese investors will have to
contend with Beijing's decision to raise the reserve
requirement ratio by 100 points to choke off money supply and
curb inflation.

SUPPLY THREATS

In Peru, unions have delayed a nationwide strike by around
two weeks to June 30, to give Congress more time to debate a
bill to lift caps on profit sharing. [ID:nN06390705]

But in Australia, concerns were growing about energy
supplies for metals producers, after gas supplies in Western
Australia were cut by 30 percent.

"Of increasing concern to the metals, over the medium term
at least, is the lasting impact from the explosion at the
Varanus Island natural gas plant, off Western Australia,"
Standard Bank said in a note.

"While many of the affected companies have set about
securing alternative energy supplies, the duration of the cuts
may yet hinder output."

Aluminium MAL3 gained $8 at $2,965. It rose 2 percent on
Friday on worries that Western Australia's gas supply problems
would limit alumina production, with the move up reinforced by
falls in LME and Shanghai stocks.

Tin MSN3 was unchanged at $22,000. Indonesian tin exports
fell almost 28 percent from May 2007 to 7,150 tonnes.

Tin has been the strongest performing metal on the LME,
hitting a record $25,500 in mid-May, and dealers said new highs
were possible.

"There are one or two contracts that are vulnerable to new
highs, tin for example. Fundamentally, it's extremely tight,
and the limited liquidity means it's quite easy to ratchet
prices up," the Singapore trader said.
Metal Prices by 0703 GMT:
Metal Last Change Pct Move End 2007 Pct chg
08
LME Cu 8050.00 50.00 +0.63 6670.00
20.69
LME Alum 2965.00 8.00 +0.27 2403.00
23.39
COMEX Cu** 362.40 0.00 +0.00 304.10
19.17
LME Zinc 1990.00 10.00 +0.51 2370.00
-16.03
LME Nickel 22000.00 0.00 +0.00 26350.00
-16.51
LME Lead 1965.00 15.00 +0.77 2550.00
-22.94
LME Tin 22000.00 0.00 +0.00 16400.00
34.15
** 1st contract month for COMEX copper
(Editing by Michael Urquhart)