(Updates with closing prices)
* Dollar rallies vs currency basket, weighs on copper
* Shanghai bonded copper premiums soar to $200
By Maytaal Angel
LONDON, July 2 Copper slipped on Tuesday from a
near two-week high in the previous session as a stronger dollar
weighed on prices and investors remained concerned about
economic prospects in top metals consumer China.
The dollar hit a four-week high against the yen and rose
against a basket of currencies on the prospect of U.S. jobs data
later this week fuelling expectations the Federal Reserve will
scale back stimulus.
A stronger dollar makes dollar-priced metals costly for
Three-month copper on the London Metal Exchange
ended at $6,915 a tonne down from $6,979 at the close on Monday.
A forecast from the VDA industry group of a fall in new car
sales this year in Germany, Europe's largest auto market, did
little to boost risk appetite for metals, although recent
factory surveys showed that contraction across the euro area is
Monday's manufacturing surveys from the United States,
Britain and Japan were upbeat, but the latest reading from China
showed factory activity slowed to multi-month lows as demand
dried up from customers at home and abroad.
China is the world's top metals consumer, accounting for 40
percent of global copper demand.
"Concerns about China are worrying, especially as regards
liquidity, (and) on the supply side things are improving. That
said, metals have really priced in most of the negative news, so
nearer term, we could see a bit of a short-covering bounce,"
Credit Suisse analyst Karim Cherif said.
Markets are awaiting U.S. non-farm payrolls data for June,
due on Friday, for signals about the health of the world's
largest economy and hints on when the Federal Reserve may begin
to taper off its supportive bond-buying programme.
On the plus side for copper, the premium for cash metal
versus the three month price CMCU0-3 rose to $18.00, its
highest point since mid-July 2012, which indicated a squeeze on
In Shanghai, meanwhile, copper drew some support from a
flurry of demand for financing purposes in China.
Some trading companies have been importing metal before
selling it onto the domestic market in return for cash, pushing
up premiums for copper in bonded zone stores and underpinning
Bonded copper premiums in China have soared to $190-$210
above LME copper prices from $140-$155 a month ago. (www.shmet.com/)
Also Chinese stock markets have steadied in recent days as
investors, spooked by last month's cash crunch, took heart from
official reassurances of ample liquidity in the financial
"We believe there will be a series of relief rallies, with
(metals) prices looking near the bottom, but any upside will be
short-lived given the weaker outlook on China," ANZ said in a
In other metals, lead ended at $2,079.50 from
$2,087.50 on Monday, zinc closed at $1,892 from $1,890
and tin closed at $20,225 from $19,970.
Nickel ended at $14,040 from $13,965 and aluminium
, untraded at the close, was bid at $1,832 from
(Additional reporting by Melanie Burton; Editing by Anthony
Barker and David Evans)