RTRS:METALS-Copper gains on U.S. data, China restocking
* Copper up on weak dlr, short-covering, U.S. housing data
* U.S. Richmond Fed manufacturing index for June due at
1400 GMT
(Updates prices; adds quotes, details)
By Carrie Ho
SHANGHAI, June 26 (Reuters) - London copper rose for a
second session on a weaker dollar and short-covering on Tuesday,
as traders bought back their positions ahead of the upcoming
European Union Summit and took advantage of low prices following
a 2.7 percent fall last week.
Some restocking by the world's top copper buyer China on the
back of a favourable price arbitrage as well as promising U.S.
housing data also lent support to metal prices, countering bad
news in the euro zone, which saw Cyprus become the fifth member
state to seek a bailout.
Three-month copper on the London Metal Exchange rose
0.5 percent to $7,372.75 a tonne by 0451 GMT.
The most-active October copper contract on the Shanghai
Futures Exchange moved up 0.4 percent to 54,270 yuan
($8,500) a tonne by its midday close, snapping two consecutive
sessions of losses.
"The euro edged up against the dollar today, which means it
is cheaper for Europeans to buy copper today and some of them
have done so," said a LME trader.
The dollar fell against a basket of currencies on
Tuesday, making it cheaper for holders of other currencies,
including the euro, to buy commodities which are denominated in
the greenback.
"Copper prices came off quite a bit last week and some
shorts also feel that it is time to cash out," said the trader.
Shanghai copper prices were bolstered by restocking by
Chinese bargain-hunters, although they were doing so on a
hand-to-mouth basis due to sluggish demand from their downstream
customers, traders said.
"A reluctance by many Chinese copper producers to sell their
stocks at these low prices is also causing tightness in
supplies, which is supporting prices," added a Shanghai-based
trader.
All eyes are on the two-day European leaders summit to be
held in Brussels on June 28-29, but investors remained doubtful
that the meeting, held for the 20th time, would yield any
substantive measures to solve the region's protracted debt
crisis.
While there was no shortage of bad news from the euro zone,
with Cyprus seeking a lifeline for its banks and budget just
hours after Spain submitted a formal request to bail out its
banks, market sentiment was not all bearish, with the euro
and Asian shares up as much as 0.2
percent.
The prospect of improving growth in China, the world's
second-largest economy, was also key to easing worries stemming
from the financial turmoil in Europe.
A spokesman for the Chinese trade ministry said on Tuesday
that Beijing's export growth is likely to improve for the rest
of the year and the country could meet its 2012 target for 10
percent growth in trade.
SLUGGISH CHINESE BASE METALS DEMAND
Demand for all base metals in China remains flaccid, as
downstream industries reel from slowing domestic growth and a
fall in demand for Chinese exports from major economies,
especially Europe - China's top trade partner.
"Aluminium prices are weighed down by news that local
governments are supporting high-cost aluminium smelters with
subsidies to boost local GDP," said the trader.
Still, further falls may be limited since top aluminium
smelter Aluminum Corporation of China Ltd may cut supply to
boost prices, said an analyst with an international firm.
Traders noted Chinese zinc's fundamentals were also
weak, given overall stockpiles and soft demand.
The Chinese lead market was, however, seeing better
fundamentals, with supplies relatively tight after a government
crackdown on lead pollution last year resulted in more
consolidation in the industry.
Base metals prices at 0451 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7372.75 36.75 +0.50 -2.99
SHFE CU FUT OCT2 54270 240 +0.44 -2.44
LME Alum 1868.00 3.00 +0.16 -7.52
SHFE AL FUT OCT2 15370 -145 -0.93 -2.97
HG COPPER JUL2 331.90 0.30 +0.09 -3.41
LME Zinc 1809.50 4.50 +0.25 -1.92
SHFE ZN FUT OCT2 14555 -10 -0.07 -1.62
LME Nickel 16440.00 20.00 +0.12 -12.13
LME Lead 1804.00 16.00 +0.89 -11.35
SHFE PB FUT 14700 -60 -0.41 -3.86
LME Tin 18520.00 20.00 +0.11 -3.54
LME/Shanghai arb 386
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
