* Bank funding plans allay European debt crisis for short-term
* Copper may rebound to $8,863-technicals
* COMING UP: EU finance ministers meeting in Poland
LONDON, Sept 16 (Reuters) - Copper rose on Friday, building on the strength
gained from the previous session after a funding plan for banks allayed fears
over Europe's festering debt crisis, but the support is expected to be
short-lived.
Three-month copper on the London Metal Exchange (LME) traded at
$8,765 a tonne at 0900 GMT from $8,711 a tonne at the close on Thursday.
"The improvement in market sentiment stems from the actions taken ... in
providing dollar liquidity to European banks," Natixis analyst Nic Brown said.
Major central banks around the world will cooperate to offer three-month
U.S. dollar loans to commercial banks in order to keep money markets from
freezing up in the wake of Europe's sovereign debt crisis.
The European Central Bank said on Thursday it would hold three fixed-rate
operations between October and December to provide banks as many dollars as they
needed, in order to ease any funding crunch over the year-end.
But the plan is likely to offer only short-term relief to the metals
markets, as investors remain sceptical of any speedy resolution to the crisis.
"Yes it's good that short term liquidity has been provided which will help
... but ultimately the question is all about long term fiscal sustainability,
and we are miles away from that yet," Brown said,
"It's clear that any kind of negative outcome in Europe could be very
dangerous indeed. That is clearly where the risks lie at the minute for the
global economy as a whole. We are not out of the woods yet."
Markets are watching a meeting of U.S. Treasury Secretary Timothy Geithner
and European finance ministers later in the day. Geithner holds talks with the
ministers on the possibility of leveraging the euro zone's bailout fund to help
resolve the debt crisis.
CHINESE DEMAND
Copper stocks at LME-approved warehouses fell 125 tonnes to 466,025 tonnes.
Levels are about a third higher than in December 2010, data showed.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange
fell 1.1 percent from last Friday, the exchange said on Friday.
Meanwhile, lead stocks at LME warehouses hit a 16-1/2 year high as they rose
5,075 tonnes to 327,750 tonnes. They have been rising since mid-August.
The International Lead and Zinc Study Group has reported a 237,000 tonne
surplus in the global refined zinc market from January to July; it pegged excess
supplies in the refined lead market at 127,000
tonnes.
"In case of an extended slowdown in activity, zinc and lead look more
vulnerable as both markets have remained oversupplied," Credit Suisse said in a
note.
Zinc , used in galvanizing, was at $2,199 from $2,189 a tonne, while
battery material lead traded at $2,395.75 from $2,385.5 a tonne.
In macroeconomic news that may affect prices via currencies, the Thomson
Reuters/University of Michigan Surveys of Consumers release the preliminary
September consumer sentiment index at 1355 GMT.
The latest data from the United States on Thursday was mixed, with one batch
showing that new claims for jobless benefits hit their highest level last week
since late June, but that industrial production edged up 0.2 percent last month.
As market participants worry that top consumer China's copper demand may
buckle under the global economic gloom, JX Nippon Mining and Metals Corp , parent of Japan's top copper smelter, said the Chinese demand remains
solid.
Strikes at Freeport McMoran's Grasberg copper and gold mine in
Indonesia and Cerro Verde copper mine in Peru entered the third day, supporting
sentiment in the market.
China may get its first physically backed exchange-traded nickel fund later
this year, which could raise the country's import demand for the metal, trading
sources said.
Three-month nickel traded at $21,901 from $21,800 a tonne. Among
other metals, tin traded at flat at $23,600 at Thursday's close while
aluminium was at $2,379 from $2,374 a tonne.
Metal Prices at 0903 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2010 Ytd Pct
move
COMEX Cu 395.80 1.05 +0.27 444.70 -11.00
LME Alum 2377.00 3.00 +0.13 2470.00 -3.77
LME Cu 8767.00 56.00 +0.64 9600.00 -8.68
LME Lead 2396.00 10.50 +0.44 2550.00 -6.04
LME Nickel 21910.00 110.00 +0.50 24750.00 -11.47
LME Tin 23550.00 -50.00 -0.21 26900.00 -12.45
LME Zinc 2197.50 8.50 +0.39 2454.00 -10.45
SHFE Alu 17230.00 15.00 +0.09 16840.00 2.32
SHFE Cu* 65850.00 830.00 +1.28 71850.00 -8.35
SHFE Zin 16950.00 115.00 +0.68 19475.00 -12.97
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
