LONDON, April 16 (Reuters) - Copper traded flat on Friday, as improving demand expectations and falling inventories offset lingering concerns over tightening of global monetary policies.
By 1031 GMT, copper for three month delivery CMCU3 on the London Metal Exchange traded at $7,950 a tonne from $7,945 at the close on Thursday.
The red metal, used in power and construction, hit a 20-month high at $8,043.75 on Monday, as robust Chinese import data boosted prices.
"Copper seems to be struggling to maintain that momentum," David Wilson, director of metals research, Societe Generale.
"You had Chinese GDP data suggesting everything was positive but maybe overheating, then tightening on bank lending ... the market has been fickle and nervous because one minute data is positive -- then on reflection, not so."
China raised mortgage rates and down payment requirements on Thursday to cool growth in the property sector, a major user of copper pipes and wiring. [ID:nTOE63E08N] This followed unexpectedly strong annual growth data from China, the world's top metals consumer, prompting renewed calls for tighter policies to prevent the economy from overheating.
But U.S. manufacturing data offered some encouragement, analysts said, despite a soft weekly jobless report. [ID:nN15325702]
"When we do start to see an uptick in inflation and see raising of rates, China may struggle to keep inflation under control," said Daniel Major, an analyst at RBS Global Banking & Markets. "That could have a negative impact on base metals."
Chinese and fund buying, a weaker dollar and improving macro data helped copper gain 140 percent last year, but market participants are now looking for improvements in Western demand.
Falling LME inventories levels are usually seen by analysts as a sign of rising demand. Copper stocks eased 1,025 tonnes to 509,400 tonnes, down from levels not seen since late 2003 above 555,000 tonnes in mid-February.
Aluminium CMAL3 traded at $2,481 versus $2,483 but earlier hit $2,494, its highest since September 2008. LME stocks for the metal, used in transport and packaging, rose 3,150 tonnes to remain near record highs at 4.56 million tonnes.
A large portion of those aluminum stocks are tied up in finance deals, to release cash for producers and to earn banks higher returns than they would get in money markets. [ID:nGEE5BA277] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic on aluminium stocks, click:
here ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> Steel making ingredient nickel CMNI3 traded at $27,425 from $27,225, and earlier hit its highest level since May 2008 at $27,544.
Battery material lead CMPB3 was at $2,379.75 from $2,340 but had touched a three month high at $2,392.
Nickel inventories fell 636 tonnes to 151,242 tonnes, down from record levels at 166,476 in early February.
"Surprisingly strong," said David Thurtell, an analyst Citigroup on base metals. "We've had strong Chinese growth, a good kick-off to the earnings season in the United States, and supportive stocks moves."
"Nickel for instance keeps losing stock," he said. "For 2009 it was China picking the complex up off its feet, (in) 2010 does the West become a second locomotive for the train?"
Speculators have also been active in the nickel market in recent weeks, with LME data showing a dominant position controlling between 50-80 percent of cash warrants. [LME/WC]
The discount between the cash and three-month contract MNI0-3, at $60 a tonne, is more than half $83 on March 1.
For a the latest column on nickel, click [ID:nLDE63C19H]
Zinc CMZN3 traded at $2,536 a tonne from $2,509 but earlier hit a three-month high at $2,550 as analysts cited short-covering, while tin CMSN3 was at $19,149 from $18,970 but touched a peak not seen since September 2008 at $19,165.
Metal Prices at 1034 GMT Metal Last Change Pct Move End 2009 Ytd Pct
move COMEX Cu 359.00 -0.65 -0.18 332.75 7.89 LME Alum 2473.00 -10.00 -0.40 2230.00 10.90 LME Cu 7939.00 -6.00 -0.08 7375.00 7.65 LME Lead 2370.00 30.00 +1.28 2432.00 -2.55 LME Nickel 27325.00 100.00 +0.37 18525.00 47.50 LME Tin 19100.00 490.00 +2.63 16950.00 12.68 LME Zinc 2531.00 22.00 +0.88 2560.00 -1.13 SHFE Alu 17030.00 -60.00 -0.35 17160.00 -0.76 SHFE Cu* 62350.00 -240.00 -0.38 59900.00 4.09 SHFE Zin 19615.00 150.00 +0.77 21195.00 -7.45 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
