LONDON, Aug 11 (Reuters) - Copper tumbled to its lowest in more than a week on Wednesday as confidence crumbled in the face of dollar strength and renewed worries about growth prospects in the United States, the world's largest economy.
Benchmark copper touched $7,205 a tonne, a level last seen on July 30, as the dollar rose against the euro to its highest in more than a week. A higher dollar makes metals more expensive for holders of other currencies.
The metal used extensively in power and construction traded at $7,225 a tonne in official rings compared with $7,295 at the close on Tuesday.
Focus on Wednesday was on the U.S., where the Federal Reserve took a small but significant step to counter a weakening recovery, saying it would use cash from maturing mortgage bonds it holds to buy more government debt.
"People are obviously concerned about downgrades to growth prospects in the U.S., that's what is weighing on sentiment," said Daniel Major, analyst at RBS.
"Chinese numbers were relatively supportive ... the market is looking for macro clarity, recent data have been mixed. Recent price action reflects some confidence in the idea that we're heading for mid-cycle moderation rather than double-dip."
Annual factory output growth in China, the world's largest consumer of industrial metals, slowed to 13.4 percent last month from 13.7 percent in June but beat forecasts of a 13.2 percent rise.
China's refined copper output rose 16 percent from a year earlier to 398,000 tonnes last month, with production of all other base metals, except tin, also higher from year-ago levels.
But refined copper output was down 5.7 percent in July from a record 422,000 tonnes in June. INVESTORIES REINFORCE
Copper hit a three-month high of $7,527 a tonne last week as investors bought on the expectation of stronger demand. But enthusiasm since then has waned, partly because of a weak monthly U.S. jobs report.
"U.S. July non-farm payrolls added to the bearish mood," said VTB Capital in a research note.
"China's declining July imports also raised concerns that restocking in raw materials is easing even though unwrought copper imports were actually higher than in the month before."
Annual import growth in China moderated to 22.7 percent from 34.1 percent in June, well below forecasts of a 30 percent rise as a government induced slowdown took a toll.
However, China's copper imports rose 4.5 percent on the month in July, the first rise in four months, likely signalling the start of rising purchases ahead of peak consumption in September.
Also supportive are stocks of copper in LME warehouses, at around 408,000 tonnes compared with 6-1/2 highs above 555,000 tonnes in the middle of February, which resumed their downward trajectory this month after a brief upswing.
Aluminium prices have also been reinforced by LME stocks down at about 4.4 million tonnes from a record above 4.64 million tonnes in January.
Prices of the metal used in transport and packaging traded at $2,157.5 a tonne in official rings from $2,170 on Tuesday.
Support has been garnered from financing deals which are said to have tied up about 70 percent of LME stocks and plans to launch physically backed aluminium exchange traded products.
That has led to worries about availability and one reason why the contango -- discount for cash material against the three-month contract -- has narrowed to around $9 a tonne compared with above $30 a tonne in June.
Zinc traded at $2,052 a tonne from $2,085 on Tuesday, battery material lead was untraded in the rings, but bid at $2,075 a tonne from $2,125 and stainless steel material nickel bid at $21,825 from $22,200 a tonne.
Lead touched $2,071 a tonne and zinc $2,047 -- both are the lowest since August 2.
Tin was bid at $20,345 from $20,600.
Metal Prices at 1211 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 327.80 -3.45 -1.04 334.65 -2.05 LME Alum 2152.00 -18.00 -0.83 2230.00 -3.50 LME Cu 7231.00 -64.00 -0.88 7375.00 -1.95 LME Lead 2074.00 -51.00 -2.40 2432.00 -14.72 LME Nickel 21725.00 -475.00 -2.14 18525.00 17.27 LME Tin 20075.00 -525.00 -2.55 16950.00 18.44 LME Zinc 2055.00 -30.00 -1.44 2560.00 -19.73 SHFE Alu 15350.00 -60.00 -0.39 17160.00 -10.55 SHFE Cu* 56830.00 -420.00 -0.73 59900.00 -5.13 SHFE Zin 17055.00 -215.00 -1.24 21195.00 -19.53 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Editing by James Jukwey)
