METALS-Copper gains 1 pct on Fed outlook boost

* Copper rallies after Fed raises 2010 prospects

* Market largely overlooks Q3 GDP downward revision

* Stocks still rising but "perspective required"

By Nick Trevethan

SINGAPORE, Nov 25 (Reuters) - Copper rose 1 percent in
London and Shanghai on Wednesday, buoyed by comments from the
Federal Reserve on the pace of U.S. growth in 2010 after
revised third quarter growth fell short of expectations.

Federal Reserve officials are increasingly confident the
U.S. economic recovery will be durable, but do not see
employment or inflation picking up soon, minutes from their
November meeting showed. [ID:nN24313828]

The Fed minutes, a fifth straight monthly rise in U.S. home
prices in September and an increase in consumer confidence in
November helped undo the damage to sentiment from a nearly
5,000-tonne jump in copper stocks MCU-STOCKS and a downward
revision to U.S. GDP to 2.8 percent annually in the third
quarter from 3.5 percent. [ID:nN24297263] [ID:nNYS007563]
[ID:nN24296971]

Analysts had forecast a 2.9 percent annual rate.

"My impression is that the market had expected the downward
revision so it didn't have much impact on commodities," Ben
Westmore, commodities economist at National Australia Bank,
said.

"There is still uncertainty about growth prospects so any
comments from credible institutions about the outlook will be
positive for our markets."

Three-month copper on the London Metal Exchange MCU3 rose
almost 1 percent to $6,930 tonne by 0351 GMT, $80 shy of a
14-month high touched on Monday.

Benchmark third-month Shanghai copper SCFc3 rose 1.1
percent to 54,450 yuan.

Looking ahead, Westmore said the market would continue to
watch Chinese refined copper import numbers, which dropped 40
percent in October, in part due to week-long holidays.

But he expected metals prices to continue to rally next
year, although rises would be below trend, at 10 percent.

Copper has rallied 125 percent so far in 2009.

Senior Fed officials have also expressed concern that their
plans to hold interest rates low for a long time could have
negative repercussions, including possible speculative
financial market activity.

"Cheap liquidity, especially generous funding of U.S.
deficits by Chinese savers, led to the speculative bubble," a
commodities analyst in Sydney said, noting the central banks'
cure for world economic ailments was just a bigger dose of the
cause.

"Now we have even greater liquidity, which has a twofold
effect -- downward pressure on the dollar and demand
stimulation. Both support commodities, but how long can we have
zero rates and money printing before the system starts to choke
again?"

PERSPECTIVE

LME copper stocks rose 4,725 tonnes to 429,650 tonnes their
highest in about seven months.

"Base metals should be retreating, but a glum-looking
dollar and resilient equity markets say otherwise," ANZ's
senior commodities analyst said in a note,

"Rising LME and Shanghai supply are being largely ignored
... however, there is a level of perspective required.
Bellwether base metal, copper, still only has seven days of
supply sitting in LME warehouses -- the 10-year average is 10
days -- while earlier this decade, the level was 23 days."
Base metals prices at 0351 GMT
Metal Last Change Pct Move End 2008 Pct chg
09
LME Cu 6930.00 60.00 +0.87 3060.00
126.47
SHFE Cu* 54450.00 570.00 +1.06 23840.00
128.40
LME Alum 2029.00 5.00 +0.25 1535.00
32.18
SHFE Alum* 15620.00 60.00 +0.39 11540.00
35.36
COMEX Cu** 311.20 0.00 +0.00 139.50
123.08
LME Zinc 2262.00 26.00 +1.16 1208.00
87.25
SHFE Zinc 18205.00 45.00 +0.25 10120.00
79.89
LME Nickel 16860.00 110.00 +0.66 11700.00
44.10
LME Lead 2350.00 17.00 +0.73 999.00
135.24
LME Tin 0.00 -14950.00 -100.00 10700.00
-100.00
LME/Shanghai arb^ 913
Dollar/yuan 6.8281 \ 6.8291
** 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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