Copper dropped almost 2 percent on the London Metal Exchange on Thursday, tracking losses in U.S. equities after a surge in treasury spreads and mixed U.S. housing data. U.S. equities swooned on Wednesday as rising yields on U.S. government debt fuelled concern that businesses and consumers could face higher borrowing costs, which could hamper an economic recovery. Treasuries maturing in 10 and 30 years lost over a full point in price, sending yields to six- and nine-month highs respectively, despite a well-received auction of five-year notes. With many markets across North Asia on holiday, including the Shanghai Futures Exchange, that weaker sentiment prevailed on London metals. London Metal Exchange copper for delivery in three months fell $85 to $4,580 a tonne at 0317 GMT, having touched a near three-week peak of $4,725 a tonne on Wednesday. "This is a continuation of the after-hours action on Wednesday triggered by weak U.S. equities. With Shanghai out, there isn't much else to drive sentiment until London traders get in," a dealer in Singapore said. U.S. housing data on Wednesday sent mixed signals to investors. The number of unsold homes rose last month, stoking worries that prices have further to fall. But the data also showed existing home sales climbed in April to an annual rate of 4.68 million from a 4.55 million pace in March, slightly higher than market expectations for a 4.66 million-unit pace. Inventories data was supportive. Shanghai Futures Exchange copper stocks fell 11 percent in weekly data released early because of the holiday, down at 30,217 tonnes from 33,798 tonnes last week. LME inventories also fell, down 7,300 tonnes to 319,275 tonnes. Cancelled warrants declined to 43,375 tonnes, according to Wednesday's LME stocks data, from 47,625 tonnes. For graphics on global metal stocks, see: http://graphics.thomsonreuters.com/059/GLBCPSTX270509.jpg http://graphics.thomsonreuters.com/059/GLBZNCSTX270509.jpg http://graphics.thomsonreuters.com/059/GLBALSTX270509.jpg But some analysts have warned that the steep gains seen so far this year may not be be sustained during the northern hemisphere's summer lull. Analysts in China expect soaring imports to slow in June and for excess metal to pile up in Shanghai warehouses in the next month or two, which will weigh on prices. But Peter McGuire, managing director of Commodity Warrants Australia, saw a steadier future for commodities. "Prices might not continue on the same trajectory we have seen in the past few months. Commodities have been on fire -- copper up 50 percent, nickel up 45 percent -- but we will see a period of steadiness and consolidation." LME nickel dipped 1.8 percent to $13,150. On Wednesday prices touched $13,900 but failed to crack resistance between $13,500 to $14,000 - the top of the trading channel since late October. "While medium to longer term technical studies continue to improve with a major bottoming pattern appearing to be under construction, prices remain firmly range bound for the time being," brokerage Newedge said in a note. It said that unless nickel made a clear and sustained break above there, further sideways activity was likely for the time being. Base metals prices at 0317 GMT Metal Last Change Pct Move End 2008 Pct chg 09 LME Cu 4580.00 -85.00 -1.82 3060.00 49.67 LME Alum 1390.00 -15.00 -1.07 1535.00 -9.45 COMEX Cu** 211.50 -0.65 -0.31 139.50 51.61 LME Zinc 1450.00 -10.00 -0.68 1208.00 20.03 LME Nickel 13150.00 -245.00 -1.83 11700.00 12.39 LME Lead 1430.00 -15.00 -1.04 999.00 43.14 LME Tin 13600.00 0.00 +0.00 10700.00 27.10 Dollar/yuan 6.8278 \ 6.8287 ** 1st contract month for COMEX copper (Reporting by Nick Trevethan; Editing by Ben Tan)

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