MARKETS-METALS (UPDATE 3)
* News that ECB to euro zone govt bonds a big plus
* Demand on the road to stronger recovery
* Copper, aluminium LME stocks fall further
(Recasts, adds comment/details, pvs Shanghai)
By Pratima Desai
LONDON, May 10 (Reuters) - Industrial metals bounced on Monday, taking heart from news of a $1 trillion emergency package to stabilise markets and resolve the Greek debt crisis that has threatened to sink the euro.
The deal, hammered out by European Union finance ministers, central bankers and the International Monetary Fund in marathon weekend talks, was the largest in more than two years since G20 leaders threw pumped money into the global economy following the collapse of Lehman Brothers.
Benchmark copper on the London Metal Exchange was trading at $7,145 a tonne at 1011 GMT from $6,940 on Friday.
The metal, used in power and construction, last week tumbled 6.5 percent, hitting a trough of $6,632.75 a tonne, its lowest since February 10.
"The package has helped, it looks promising and the news about the ECB buying bonds is a key factor because it now means there is a buyr of last resort," said Robin Bhar, analyst at Credit Agricole. "But we will have to wait and see if it has any lasting effect."
Also important was news that the European Central Bank will buy euro zone government bonds to support fractured markets, abandoning firm resistance to full-scale asset purchases in light of Greece's debt crisis.
"There is a feeling that however much money you throw at Greece, they might still think it's in their best interests to partially default or default. This (ECB news) makes it seem far less likely," Bhar said.
ATTRACTIVE Underpinning the gains on Monday was also a sense that the global economy and demand for industrial metals are on the road to a stronger recovery.
Manufacturing and jobs data from the United States, the world's largest economy, have helped boost sentiment.
"The contrast between increasingly supportive macro fundamentals against escalating policy concerns has perhaps never been as glaring as in the past several days and weeks," said Goldman Sachs in a note.
"We would generally view the recent sell-off as a buying opportunity for ... with copper in particular looking particularly attractive post the recent severe sell-off."
Many fear demand from China, the world's largest consumer of industrial metals, will tumble as the country's government tightens policy to rein price pressures.
Others think policy will not be tightened to the extent that it significantly hits demand. They are not about worried a 4.4 percent fall in April imports of Chinese copper imports, after a 41.6 percent gain in March.
"They are down only marginally ... domestic prices do not favour imports," Bhar said.
Positive sentiment was further reinforced by the Chinese central bank which said it would maintain appropriately loose monetary policy.
Another supporting factor are falling stocks of metal in LME warehouses.
Copper stocks have fallen 64,200 tonnes since the middle of February to 490,875, while aluminium stocks are down 134,525 to 4.5 million tonnes since a record high above 4.64 million tonnes hit on January 21.
Aluminium was at $2,142 a tonne from $2,072.5, zinc at $2,147 from $2,091, lead at $2,113 from $2,042, tin at $17,920 from $17,600 and nickel at $23,280 from $22,550 on Friday.
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For reports on other commodity markets click on Metal Prices at 1007 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move LME Alum 2133.00 60.50 +2.92 2230.00 -4.35 LME Cu 7136.00 196.00 +2.82 7375.00 -3.24 LME Lead 2106.00 64.00 +3.13 2432.00 -13.40 LME Nickel 23250.00 700.00 +3.10 18525.00 25.51 LME Tin 17870.00 270.00 +1.53 16950.00 5.43 LME Zinc 2145.00 54.00 +2.58 2560.00 -16.21 SHFE Alu 15720.00 245.00 +1.58 17160.00 -8.39 SHFE Cu* 56620.00 2120.00 +3.89 59900.00 -5.48 SHFE Zin 16980.00 325.00 +1.95 21195.00 -19.89 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Reporting by Pratima Desai; Editing by Amanda Cooper)
