November 1, 2019 / 11:22 AM / 21 days ago

METALS-Copper edges higher after Chinese data, downside risks remain

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Updates with official prices)

By Eric Onstad

LONDON, Nov 1 (Reuters) - Copper prices clawed higher on Friday after upbeat Chinese manufacturing data, but uncertainty about global growth and trade tensions will likely weigh on the market, analysts said.

China’s factory activity unexpectedly expanded at the fastest pace in well over two years in October, as new export orders rose and plants ramped up production, a private business survey showed.

The results stand in contrast with an official survey published on Thursday, which showed China’s factory activity shrank for the sixth straight month in October.

“The PMIs in China have been oscillating between expansion and contraction for the last couple of months,” said Geordie Wilkes, head of research at Sucden Financial, referring to purchasing managers data.

“Even though we had that data from China, there was quite a lot of negative news yesterday .. We’re still in the camp that sees prices edging lower and I think we’ll probably push back to $5,700 in the near term,” Wilkes added.

“The indicators are still on the softer side and there’s a lot of continued uncertainty.”

While U.S. President Donald Trump said on Thursday the United States and China would soon announce a new site where he and Chinese President Xi Jinping will sign a “Phase One” trade deal, China’s Foreign Ministry on Friday dismissed as speculation talk the two leaders will meet in Macau.

Three-month copper on the London Metal Exchange (LME) gained 0.4% to $5,819 a tonne in official open-outcry trading.

It recovered after a 1.9% drop in the previous session, which was the biggest fall in almost three months due to the weak China data on Thursday. It is still heading for a weekly drop.

* ZINC STOCKS: LME on-warrant zinc stocks MZNSTX-TOTAL hit a record low of 27,800 tonnes while the speculative net long in zinc marked the highest since mid-April, according estimates by broker Marex Spectron.

LME zinc failed to trade in official rings but was bid up 0.4% at $2,493 a tonne.

* ALUMINIUM SPREAD: The discount of cash LME aluminium to the three-month contract CMAL0-3 has declined to 75 cents a tonne, the lowest since January and compared with a discount of $33.25 in mid-September. This indicates less availability of inventories in the LME system.

LME aluminium added 0.4% to trade at $1,762 in official activity.

* NICKEL: Nickel miner Independence Group NL said it will stop work on developing a downstream nickel sulphate facility.

* NICKEL STOCKS: Nickel inventories in warehouses monitored by the LME MNISTX-TOTAL, which have tumbled 58% over the past seven weeks, touched the lowest since December 2008.

* PRICES: LME nickel was bid up 0.5% at $16,730 a tonne in official rings, lead was bid up 0.1% at $2,163, and tin was bid up 0.3% at $16,575.

* For the top stories in metals and other news, click TOP/MTL (Reporting by Eric Onstad Editing by David Holmes and David Evans)

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