RTRS:Copper falls as China growth data disappoints
By Silvia Antonioli
LONDON (Reuters) - Copper fell on Friday after Chinese growth data came below-expectations, deepening worries over slower demand from the top metals consumer; while a stronger dollar and concerns about the euro zone debt crisis were also undermining the metal.
Three-month copper was trading at $8,095 by 0852 GMT, 1.5 percent down from a close of $8,220 on Thursday.
The red metal used in power and construction was on course for a 3 percent fall this week.
China's economy grew at its slowest in nearly three years in the first three months of 2012, with a weaker than expected reading raising investor concerns that a five-quarter long slide has not bottomed and that more policy action would be needed to halt it.
"China's Q1 GDP was lower than expected as well as Q1 home sales, adding to recently negative sentiment and renewed growth fears," VTB Capital analyst Andrey Kryuchenkov said.
"Anyhow, growth of over 8 percent is not that bad, just lower than expected. This will push the government to increase public spending. The focus is back on China at the moment but really people should worry more about Europe."
Italian three-year borrowing costs rose more than a full percentage point at an auction on Thursday, boosted by fresh concerns about weaker euro zone states.
Spain's debt situation was also in focus: Madrid's borrowing costs rose at an auction last week as investors fretted about its ability to meet budget deficit goals.
Capping losses was the hope that the Chinese government will step up its growth policies and inject more liquidity in the system to prevent a further slowdown.
Market players were also cheered by better-than-expected data such as March industrial output and first quarter fixed asset investment.
"The Chinese data is certainly not catastrophic, on the contrary, it confirms the soft landing argument," said metals consultancy T-commodity in a research note.
"However it does underline that the dragon economy remains at the moment in stand-by before a rebound forecast in the second half of the year."
Weighing on copper, the euro eased against the dollar after Chinese growth data disappointed traders positioning for a strong showing.
A stronger U.S. currency makes dollar-priced commodities such as metals costlier for holders of other currencies.
SLUGGISH DEMAND
Doubts over buying from Chinese copper end-user is the main concern for investors at the moment.
"Copper demand in China has picked up slightly since the beginning of April as consumers came back to restock a little. But overall, demand remains weak and stocks are still too high," said a Shanghai-based trader.
Copper stocks in warehouses monitored by the Shanghai Futures Exchange have quadrupled since the beginning of the year.
China's demand for refined copper may revive only by September as current heavy stockpiles are depleted and Beijing takes steps to boost the cooling economy, analysts and sources at copper products manufacturing plants said on Thursday.
Tin was at $22,475 from $22,655 while zinc, used in galvanizing was at $2,012 from $2,040 Thursday's close.
Battery material lead was at $2,069.50 from $2,098 and aluminium was at $2,094 from $2,104.
