September 17, 2012 / 4:38 AM / 5 years ago

METALS-LME copper eases; but stays near 4-1/2 mth top on Fed move

* Dollar stays weak on Fed stimulus steps, supports
commodities
    * Copper prices can rally to $9,000 at least -analyst
    * No improvement in real demand seen -analyst
    * Markets eye euro zone factory data this week

 (Adds detail, updates prices)
    By Melanie Burton
    SHANGHAI/SINGAPORE, Sept 17 (Reuters) - London copper
slipped on Monday, but still retained most of the previous
session's steep climb to a 4-1/2 month top as a new round of
U.S. monetary stimulus measures and a weak dollar continued to
support prices.
    Commodities swept higher on Friday after the U.S. Federal
Reserve announced fresh stimulus steps known as quantitative
easing or QE3, joining the European Central Bank to pump a
stuttering economy with cash.  
    While commodities rallied, analysts have been cautious on
prospects for prolonged growth in industrial metals prices given
slowing activity in top metals consumer China, and because the
measures will take time to feed through to the real economy. 
    "The uptrend is going to last for another few weeks at east
because investors are getting really excited about this QE,"
Shanghai-based analyst Judy Zhu of Standard Chartered said. 
    "Copper prices can rally to $9,000 at least, but I still
don't see real demand improving here. We won't see an
improvement from Chinese industry until October-November."
    Three-month copper on the London Metal Exchange had
ticked down 0.78 percent to $8,314.50 per tonne by 0701 GMT,
after touching a high of $8,386.25 earlier - near the 4-1/2
month top of $8,411 hit in the previous session.
    LME copper rose 3.8 percent on Friday - its largest daily
percentage gain since June 29 and is now up nearly 10 percent on
the year.
    Copper prices were also supported by the dollar, which
hovered near a seven-month low versus a basket of currencies on
Monday. A soft dollar makes commodities priced in the greenback
cheaper for holders of other currencies.    
    The most active January copper contract on the Shanghai
Futures Exchange edged down 0.9 percent to close at
59,820 yuan ($9,500) per tonne.
    Hedge funds and other big speculators pumped more than $6
billion into U.S. commodity markets last week, the most in three
weeks, just before the Federal Reserve announced a third round
of stimulus for the U.S. economy, trade data showed on Friday.
 
    The Federal Reserve will buy a total of $600 billion of
bonds under its new stimulus program announced Thursday, and
will look for a U.S. unemployment rate of 7 percent before it
halts the program, according to the median of forecasts from a
Reuters poll on Friday. 
    Capping some of the metals' gains were worries about China's
property market, a top user of metals for construction but also
for collateral as developers use imports to get cheaper credit.
   Chinese property shares extended losses on Monday, slipping
more than 3 percent at one point after the eastern city of
Nanjing was reported over the weekend to have reintroduced
housing price controls to curb soaring prices. 
    Meanwhile, traders expect activity in China to be
interrupted by a week-long holiday at the beginning of October.
    In the week ahead, factory activity will come back to the
fore with a series of industrial sector reports due for release.
    "This week, focus will shift toward economic numbers with
euro zone PMIs due on Thursday. This could dampen the positive
sentiment slightly," Credit Suisse said in a research note.
    Cash copper on Friday ended at its largest discount
against the three-month contract since February, reflecting
consumer demand that has been turned off by copper's searing
rise in prices. CMCU0-3
                                                                 
  Base metals prices at 0701 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            8314.50    -65.50     -0.78      9.40
  SHFE CU FUT JAN3    59820      -550     -0.91      NA
  HG COPPER DEC2     379.20     -4.05     -1.06     10.36
  LME Alum          2168.75    -26.25     -1.20      7.36
  SHFE AL FUT DEC2    15835       -55     -0.35     -0.06
  LME Zinc          2086.00    -30.00     -1.42     13.06
  SHFE ZN FUT DEC2    15715      -130     -0.82      6.22
  LME Nickel       17713.00    -62.00     -0.35     -5.33
  LME Lead          2239.75    -25.25     -1.11     10.06
  SHFE PB FUT      16100.00   -100.00     -0.62      5.33
  LME Tin          21030.00   -645.00     -2.98      9.53
  LME/Shanghai arb^    1624
 
   Shanghai and COMEX contracts show most active months
 ($1 = 6.3145 Chinese yuan)

 (Additional reporting by Carrie Ho; Editing by Himani Sarkar)
 (carrie.ho@thomsonreuters.com; +86 21 6104 1775; Reuters
Messaging:; carrie.ho.reuters.com@reuters.net)

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