METALS-Copper pares fund-led losses as dollar wilts

* Copper pares early fund-led sell off, eyes on dollar

* Over-extended fundamentally, correction overdue

* Aluminium "a dog"; no support from Guyana bauxite strike

By Nick Trevethan

SINGAPORE, Nov 24 (Reuters) - Copper drifted lower on
Tuesday, but pared losses after early fund selling sent prices
shrinking off the 14-month highs of the previous session.

The dollar, which was the main driver behind Monday's move
in commodities that also saw gold hit a record high, reversed
early gains to edge lower against the euro EUR.

Three-month copper on the London Metal Exchange MCU3 fell
$5 to $6,945 a tonne by 0238 GMT, some $65 off a 14-month high
touched in late Asian trading on Monday.

Copper dipped to $5,880 at the start of trade.

Benchmark third-month Shanghai copper SCFc3 fell 210
yuan, or 0.4 percent, to 54,810 yuan.

"Someone sold copper off early in Asia. That's not profit
taking -- you don't leap in at the open like that without
flattening prices. I think some hedge fund tried to whack
prices down," a trader in Shanghai said.

"People have been selling metal based on short-term
fundamentals -- using data one, or two, or even three, months
old to call where the market will be in February. If they don't
get prices lower by the Thanksgiving holiday they might have to
buy back their shorts."

U.S. markets close on Thursday for the holiday and activity
was expected to wind down from Wednesday for the rest of the
week.

Recent data offered conflicting signals. China's refined
copper imports fell 40 percent to 169,374 tonnes in October,
while implied demand fell 20 percent to around 544,000 tonnes.
[ID:nPEK295836]

Chilean miners voted to end a six-week strike at the Spence
operation and miners elsewhere agreed to pay deals and LME
copper stocks continued to rise -- all potential negatives for
the market. [ID:nN23225190]

"We saw a bunch of strikes being settled in Chile, stocks
are still moving higher, but even before the homes sales data
we were touching new highs," MF Global analyst Edward Meir
said.

The dollar's stubborn refusal to break $1.50 versus the
euro and oil's flat performance on Monday suggested metals
might be due to pull back, he added.

"We haven't had a decent correction in weeks," he said,
noting that the market could slip to $6,500.

On the positive side, existing home sales in the United
States hit their highest in 2-½ years and recent
macroeconomic data from China -- industrial production, retail
sales, and inflation figures came in strongly, suggesting
continued growth.

Some traders put down the fall in China's October imports,
which followed a steep rise in September, to week-long holidays
in early October and pointed out that, averaged over the two
months, imports were around 225,000 tonnes, slightly higher
than in August.

In other base metals, aluminium MAL3 fell $6 to $2,032 in
light trade.

A strike at Guyana's biggest bauxite mine was unlikely to
lift metal prices. A union leader said workers at the 2.5
million tonne-per-year Aroaima mine owned by UC Rusal, were
resisting pressure by the company to accept layoffs in return
for a 10 percent wage increase for remaining workers.
[nN23272329]

The operation supplies enough bauxite for more than 600,000
tonnes of primary aluminium annually.

"This won't have any implications for the metal,
unfortunately," the Shanghai trader said, admitting to holding
a long position in the lightweight metal.

"It's still a dog. It's the biggest market and huge in
China but no one wants to take punt."

Aluminium has been the weakest performer of the LME complex
this year, up 32 percent from the start of January, versus a
126 percent rise in copper and 140 percent in lead.
Base metals prices at 0238 GMT
Metal Last Change Pct Move End 2008 Pct chg
09
LME Cu 6945.00 -5.00 -0.07 3060.00
126.96
SHFE Cu* 54810.00 -210.00 -0.38 23840.00
129.91
LME Alum 2032.00 -6.00 -0.29 1535.00
32.38
SHFE Alum* 15775.00 -75.00 -0.47 11540.00
36.70
COMEX Cu** 313.35 0.00 +0.00 139.50
124.62
LME Zinc 2295.00 23.00 +1.01 1208.00
89.98
SHFE Zinc 18500.00 -25.00 -0.13 10120.00
82.81
LME Nickel 16800.00 -105.00 -0.62 11700.00
43.59
LME Lead 2390.00 -20.00 -0.83 999.00
139.24
LME Tin 15155.00 5.00 +0.03 10700.00
41.64
LME/Shanghai arb^ 675
Dollar/yuan 6.8284 \ 6.8302
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
(Editing by Clarence Fernandez)
((nicholas.trevethan@thomsonreuters.com; +65 6870 3822;
Reuters Messaging:
nicholas.trevethan.reuters.com@reuters.net))
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