* Weak euro zone, China manufacturing hurt sentiment
* LME copper little changed on thin volumes
* Coming Up: Germany Ifo business climate, 0900 GMT
(Updates prices)
By Manolo Serapio Jr
SINGAPORE, Feb 23 (Reuters) - London copper steadied
on Thursday as worries over a floundering euro zone economy and
a weak manufacturing sector in top copper consumer China made it
difficult for investors to stretch this year's rally.
Copper's tentative tone was echoed in other commodities and
financial markets, with Asian equities and the euro slipping as
global economic concerns including rising oil prices cut into a
rally earlier in the week after euro zone finance ministers
signed off on Greece's rescue package.
"The market got very excited about the Greece bailout and
then we started to see a reassessment of Greece, reassessment of
Europe and a general reassesment of risk," said Nick Trevethan,
senior commodities strategist at Australia and New Zealand Bank.
"The market repriced risk in the last few days and has
become less risk friendly."
Three-month copper on the London Metal Exchange
stood at $8,439 a tonne by 0706 GMT versus Wednesday's
close of $8,435. Volume traded on LME Select was a paltry 2,480
lots.
Fresh evidence that the euro zone could slip into recession
along with a continued contraction in China's manufacturing
sector would make it hard for economy-sensitive copper to
sustain or even keep its 11 percent gain year to date.
Surveys of purchasing managers showed unexpectedly weak
activity in the euro zone's most powerful economy, Germany, and
in France. A preliminary purchasing managers' survey in China
showed export orders falling the most in eight months.
Credit Suisse said considering that Wednesday's data,
particularly the weaker manufacturing figure out of Germany, did
not fuel a sell-off, it suggests underlying strength in
industrial metals.
"However, if the German Ifo index would confirm yesterday's
softer PMI readings, the price rally could pause for longer,"
Credit Suisse said in a note, referring to German data due out
later in the day.
The most-traded May copper contract on the
Shanghai Futures Exchange slipped 0.1 percent to 60,420
yuan ($9,600) a tonne at the close.
STRONG POTENTIAL FOR ALUMINIUM
Countering poor data in Europe and China, U.S. home resales
rose to a 1-1/2-year high in January, pushing the supply of
properties on the market to the lowest level in almost seven
years in a hopeful sign for the housing sector.
Expectations of a global copper production deficit are
supporting prices but it is unclear when demand will rise, said
Germany's Aurubis, Europe's biggest copper producer.
Compared to copper, there may be more upside potential for
aluminium which has gained more than $100 in less than a
week, and at $2,280 on Thursday is not too far off its
200-moving day average of $2,311.72.
"If it broke through its 200-moving day average, it would
potentially be quite a strong signal," said ANZ's Trevethan.
"Near-term prospects look quite decent for aluminium.
There's reasonable demand from the aerospace sector, and from
the auto sector in North America at least and higher energy
prices are also supporting the market."
Aluminium stockpiles at LME warehouses staying at record
highs above 5 million tonnes as well as excess smelting capacity
had pressured prices late in 2011 even as bulk of the LME stocks
are believed to be tied to financing deals.
"If you view the stocks as available to the market then it's
a dreadful story. But if you think that a lot of that stock is
tied and not really available it's a very diffrent story in the
near term given the production cuts going on globally," said
Trevethan.
Base metals prices at 0706 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8439.00 4.00 +0.05 11.04
SHFE CU FUT MAY2 60420 -70 -0.12 9.14
HG COPPER MAR2 382.95 -0.35 -0.10 11.45
LME Alum 2280.00 0.00 +0.00 12.87
SHFE AL FUT MAY2 16225 -25 -0.15 2.40
LME Zinc 2054.00 -13.00 -0.63 11.33
SHFE ZN FUT MAY2 15865 40 +0.25 7.23
LME Nickel 20150.00 50.00 +0.25 7.70
LME Lead 2137.00 -11.50 -0.54 5.01
SHFE PB FUT 15900.00 80.00 +0.51 4.02
LME Tin 23901.00 -149.00 -0.62 24.48
LME/Shanghai arb^ 1783
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
