MARKETS-METALS (UPDATE 6)
* The dollar index falls; U.S. stocks rise
* Medium-term growth concerns still haunt investors
* Copper stocks continue to decline, down 2,350 tonnes
(Recasts, updates prices and comments)
By Rebekah Curtis and Humeyra Pamuk
LONDON, July 7 (Reuters) - Copper bounced after falling more than 1 percent on Wednesday as the dollar erased earlier gains and U.S. equity markets strengthened, but investors remained cautious for the medium term on a cloudy economic outlook.
Copper for three-months delivery on the London Metal Exchange was at $6,661.50 a tonne by 1434 GMT, after hitting a low of $6,510 earlier and versus a last bid of $6,604 a tonne on Tuesday.
"The dollar's topped out and has weakened and copper's really just following that," said RBC Capital Markets trader Randy North. "A few shorts are covering because it's traded up to the 30-day moving average," he said.
The dollar index moved into negative territory after earlier gains, making industrial metals cheaper for non-U.S. currency holders. A rise in Wall Street also gave a boost to copper, traders said.
North said he believed very short-term copper was stuck in a range between $6,300 a tonne and $6,900 a tonne, with a risk to the downside in the medium term on the back of growth concerns in Europe and in China, the world's top copper consumer.
Investors were also wary of doubts over whether the global economy will go into a double dip recession, triggered by recent poor macro economic data. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a double-dip monitor graphic: http://graphics.thomsonreuters.com/10/GLB_CYC.html ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Figures on Wednesday showed German manufacturing orders fell for the first time this year in May and data on Tuesday showed weaker-than-expected U.S. non-manufacturing growth.
Euro zone economic growth in the first three months of 2010 was confirmed at 0.2 percent quarter-on-quarter.
"We still are of the opinion that metals will likely defend their early June lows going into the July/August time period," MF Global said in a note.
STILL BULLS
"But for the long term, we're still bulls," North said.
Other traders said falling stocks in LME-registered warehouses will offer support. Stocks of copper have fallen steadily since mid-February, last dropping 2,350 tonnes to below 440,000 tonnes.
Giving the demand outlook a pick-me-up, French carmaker PSA Peugeot Citroen posted a 16.9 percent rise in first-half sales, helped by strong growth in China.
Aluminium stocks have also fallen this year, down from a record above 4.6 million tonnes, but on Tuesday rose 4,700 tonnes to 4,409,550 tonnes.
Aluminium edged up to $1,995 a tonne from $1,993. Zinc was at $1,851 from $1,850 and battery material lead was bid at $1,789 a tonne from $1,780.
Tin was quoted at $17,625 a tonne from $17,600 and nickel was at $19,160 a tonne from $19,000.
Premiums for physical nickel in Europe will likely come under pressure following a tentative agreement to end a year-long strike at Vale's Sudbury, Ontario, mining operations, traders said. Prices at 1434 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 300.20 3.65 +1.23 334.65 -10.29 LME Alum 1989.00 -4.00 -0.20 2230.00 -10.81 LME Cu 6655.00 186.00 +2.88 7375.00 -9.76 LME Lead 1790.00 10.00 +0.56 2432.00 -26.40 LME Nickel 19075.00 75.00 +0.39 18525.00 2.97 LME Tin 17550.00 -50.00 -0.28 16950.00 3.54 LME Zinc 1845.00 -5.00 -0.27 2560.00 -27.93 SHFE Alu 14820.00 10.00 +0.07 17160.00 -13.64 SHFE Cu* 52310.00 -80.00 -0.15 59900.00 -12.67 SHFE Zin 15125.00 -165.00 -1.08 21195.00 -28.64 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
