July 2, 2012 / 8:26 AM / 5 years ago

METALS-London copper dips on China, Japan factory activity

* China, Japan PMIs weakest in seven months as exports
crumble
    * Shanghai aluminium rises

 (Updates prices, adds quotes, details)
    By Carrie Ho
    SHANGHAI, July 2 (Reuters) - London copper fell on Monday,
partly reversing the 4 percent gain it made in the previous
session, after weekend data showed a Chinese factory activity
slump deepened in June, fanning fears over global metal demand.
 
    Three-month copper on the London Metal Exchange fell
0.6 percent to $7,647.75 per tonne by 0738 GMT, after surging
4.1 percent on Friday - its largest single-day rise since
November 30.
    "The latest China PMI data has dampened sentiment,
underlining how fragile the global economy is," said Orient
Futures derivatives director Andy Du.
    A factory slump in China and Japan, deepened by crumbling
foreign orders, tempered market optimism over Europe's surprise
deal last week which led to a broad rally in riskier assets.
  
    The most-active October copper contract on the Shanghai
Futures Exchange, rose 0.2 percent on Monday to 55,370
yuan ($8,700) per tonne on short-covering and in catching up
with London's gains on the euro zone news last week.
    "The euro zone's surprise decisions last week were highly
supportive to prices in the short term, but this effect won't
last as investors know the region's problems are a longer term
problem that will be hard to deal with," Du added.
    "Investors are less focused on the Chinese physical copper
market for now as things are still gloomy, with downstream
industry orders still sluggish."
    Copper demand had improved in recent weeks as consumers
restocked to take advantage of lower prices, but overall buying
remained poor, said market participants. 
    In aluminium, the most active Shanghai October contract
 rose 0.5 percent, its third session of gains since last
Tuesday's 3.4 percent dive on news that China's top
aluminium-producing province, Henan, had cut electricity prices
for smelters. 
    Traders came back into the market after realising the tariff
cuts were too small to boost additional supply, and that top
producer Aluminum Corporation of China Limited (CHALCO) had
raised its long positions in Shanghai aluminium even as prices
fell.
    "It's clear they are prepared to support domestic aluminium
prices by buying or by cutting production," said a trader.      
 
                                                               
  Base metals prices at 0738 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7647.75    -42.25     -0.55      0.63
  SHFE CU FUT OCT2    55370       130     +0.24     -0.47
  LME Alum          1914.50      3.50     +0.18     -5.22
  SHFE AL FUT OCT2    15440        50     +0.32     -2.53
  HG COPPER SEP2     346.95     -2.70     -0.77      0.97
  LME Zinc          1878.00     -2.00     -0.11      1.79
  SHFE ZN FUT OCT2    14680        95     +0.65     -0.78
  LME Nickel       16750.00     20.00     +0.12    -10.48
  LME Lead          1874.00     13.00     +0.70     -7.91
  SHFE PB FUT         14735        60     +0.41     -3.63
  LME Tin          18825.00     50.00     +0.27     -1.95
  LME/Shanghai arb    1436
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE 
 third month
 ($1 = 6.3541 Chinese yuan)

 (Reporting by Carrie Ho; Editing by Daniel Magnowski)

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