July 16, 2012 / 9:53 AM / 5 years ago

METALS-LME copper dips; US, China stimulus eyed

* Euro recovers vs dollar; fall in US retail sales hit dollar early
    * China pledges efforts to stabilise economy in H2
    * Markets await US Fed chairman testimony on Tuesday

    By Marcy Nicholson and Maytaal Angel
    NEW YORK/LONDON, July 16 (Reuters) - Copper slipped on Monday, pressured by
a decline in U.S. retail sales, worries over Europe's crisis and by investor
concerns over whether a presentation by the U.S. Federal Reserve chairman this
week will yield any clues on monetary easing. 
    Data showed a surprise drop in U.S. retail sales in June, putting pressure
on risky assets such as equities. 
    But losses in the metals market were reined in by hopes of further stimulus
from top copper consumer China after Premier Wen Jiabao said Beijing would step
up efforts to boost the economy, though investors were mindful that stimulus
efforts would take time to bear fruit.  
    Three-month copper on the London Metal Exchange ended at $7,590 a
tonne down from Friday's close of $7,700. Prices had rallied 1.9 percent to a
one-week high at $7,730 on Friday on relief over the Chinese growth data. 
    In New York, the COMEX September contract dropped 1.90 cents, or 0.5
percent, to settle at $3.4850 per lb. Dealings appeared consolidative after
Friday's surge.
    COMEX copper volume reached around 35,550 lots in late New York trade, down
nearly 30 percent from the 30-day norm, preliminary Thomson Reuters data shows.
    "The market is expecting further easing in China ... and people are also
expecting the Fed to do something (to stimulate the economy), and so Bernanke's
testimony will be the focus of attention tomorrow," said Andrey Kryuchenkov, an
analyst at VTB Capital.    
    Investors await comments due on Tuesday and Wednesday from U.S. Federal
Reserve Chairman Ben Bernanke on his stance on supporting the flagging U.S.
recovery.
    The Fed last month expanded efforts to keep long-term interest rates low 
but held off from launching a third round of outright bond purchases that would
expand its balance sheet, a form of stimulus known as quantitative easing. 
    "Base metals are marking time as prices remain largely range-bound in
anticipation of some concerted central bank moves to stimulate the economy.
Unfortunately the risk becomes to the downside as the longer we wait, the more
worried the market gets," RBC Capital Markets said in a note. 
    Steve Platt, futures strategist with Archer Financial Services in Chicago,
saw some spillover pressure from platinum, also an industrial metal,
which closed lower.    
    "I think copper's taken a little bit of a cue there in terms of weakening,
in response to not only the economic news but also a feeling that the slowing
economy is going to weigh on values," Platt said.
    
    EURO ZONE WOES WEIGH     
    Also weighing on copper, the euro hovered near a two-year low versus
the dollar earlier in the session, hurt by a report suggesting a change in the
European Central Bank's stance on how some bondholders could be treated under
Spain's bank bailout. 
    A weak euro makes dollar-priced metals costlier for European investors.
Copper remained weak, however, after the euro changed direction and turned firm
to a high of $1.2290.
    The Wall Street Journal said ECB President Mario Draghi advocated imposing
losses on holders of senior bonds issued by the worst-hit Spanish savings banks
but also said finance ministers rejected the advice due to concerns financial
markets would react badly to such a decision. 
    "Commodities have been very much affected by the euro, and from the physical
markets standpoint we're going through a quiet period. The next couple of months
will not be easy for commodities; we're looking for a meaningful recovery in
price in the fourth quarter," Nikos Kavalis, an analyst at RBS, said.
    Any moves by Beijing to ramp up infrastructure spending would bolster demand
for industrial metals, especially copper, though it would probably take time for
Chinese industry to eat into China's large stock surplus.
    Data out on Friday showed copper inventories in warehouses monitored by the
Shanghai Futures Exchange rose 3.7 percent from a week ago to their highest
since late May. Unreported bonded warehouse stocks are also said to be high.
    Hedge funds and money managers meanwhile increased their net short position
in copper to 4,813 contracts in the week to July 10, data showed on Friday.
  
    In other metals traded, battery material lead ended at $1,899 from
Friday's close of $1,880, while zinc, used in galvanizing, closed at
$1,900 from $1,874 and aluminium ended at $1,918 from $1,910. 
    Soldering metal tin closed at $18,750 from $18,780, while
stainless-steel ingredient nickel ended at $16,250 from $16,200. 
 Metal Prices at 1845 GMT
                                                                   
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       350.05       -0.35     -0.10     343.60      1.88
  LME Alum      1917.50        7.50     +0.39    2020.00     -5.07
  LME Cu        7690.00      -10.00     -0.13    7600.00      1.18
  LME Lead      1899.50       19.50     +1.04    2035.00     -6.66
  LME Nickel   16200.00        0.00     +0.00   18710.00    -13.42
  LME Tin      18750.00      -30.00     -0.16   19200.00     -2.34
  LME Zinc      1889.00       15.00     +0.80    1845.00      2.38
  SHFE Alu     15605.00       85.00     +0.55   15845.00     -1.51
  SHFE Cu*     56170.00      400.00     +0.72   55360.00      1.46
  SHFE Zin     14800.00       15.00     +0.10   14795.00      0.03
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07

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