RTRS:METALS-Copper, aluminium flat ahead of expected ECB rate cut
* ECB 1/4 point rate cut priced in markets
* Bank may hold fire on bond buying, disappoint markets
* Coming Up: ECB rate decision; 1145 GMT
By Eric Onstad and Carrie Ho
LONDON/SHANGHAI, July 5 (Reuters) - Copper and aluminium were largely flat
on Thursday ahead of a European Central Bank meeting that is expected to cut
rates but may disappoint investors if it fails to revive stimulus measures that
could boost economic growth and metals demand.
Three-month copper on the London Metal Exchange rose 0.2 percent to
$7,741 per tonne by 0917 GMT, after falling 1.2 percent in the prior session.
Aluminium added 0.15 percent to $1,959 a tonne.
Copper has rebounded 5 percent since Friday, when European leaders agreed a
surprise euro zone rescue deal and after weak economic data fuelled expectations
of fresh stimulus measures by global central banks.
Investors expect the ECB to cut rates by a quarter percentage point when it
announces its decision at 1145 GMT, after surveys showed all of Europe's biggest
economies are in recession or heading there.
Some also hope that ECB President Mario Draghi will announce the bank will
resume its purchases of government bonds when he holds a news conference at 1230
GMT, but analysts say this is an unlikely scenario.
"The markets have largely priced in a cut already, so it's hard to see that
we're going to have any significant further bounce," said analyst Wiktor Bielski
at VTB Capital in London.
"I suspect the ECB possibly wants to just hold its fire for the time being,
a little bit like the Fed, and try to time any announcement so it can get the
biggest and most positive reaction."
A rate cut by the ECB would back up the EU summit deal to strengthen the
region's financial system and help avert a break up of the euro zone.
Investors are also keeping an eye on Friday's key monthly U.S. jobs report
which will be scoured for clues on whether the Federal Reserve will take
additional easing steps. Non-farm payrolls were expected to see an addition of
90,000 workers in June, with the unemployment rate holding steady at 8.2
percent.
CHINESE RESTOCKING
In physical markets, opportunistic restocking in China has helped support
copper prices and kept the spread of Shanghai's July contract over its
October contract in backwardation since early May.
Prices may also be bolstered by a small pickup in downstream copper demand.
In a note on Thursday, Barclays Commodities Research pointed to "solid"
transport-related copper demand and "improving" copper wire order books in
China, but warned that sentiment remained bearish which means fewer long
positions by investors.
"Risk to prices in the near term is from positioning and policy, either of
which would trigger a sharp short-covering rally. However, we would view these
gains as difficult to sustain without an improvement in economic activity," it
added.
Metals prices are seeing support from expectations that China, the world's
largest consumer of industrial metals, would embark on fresh stimulus measures
to boost flagging economy growth.
A slew of weak data from China, including a private sector survey which
showed services firms grew at their slowest rate in 10 months in June, easing
back from May's 19-month peak, was seen by investors as a precursor to stimulus
measures.
In China, Shanghai aluminium was one of the session's best performers, with
the most active Shanghai contact recovering 5.1 percent by the end of
the day from a three-year low it posted last week as Chinese traders piled back
in believing it was oversold.
"Despite problems of overcapacity in China, aluminium looks one of the most
attractive to traders now among the industrial metals at these low price
levels," said a metals buyer.
In other metals, LME nickel gained 0.6 percent to $17,029 a tonne
and zinc lost 0.25 percent to $1,893.25 a tonne.
Tin fell 0.26 percent to $19,100 a tonne and lead declined
0.21 percent to $1,902.
Metal Prices at 0922 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2011 Ytd Pct
move
COMEX Cu 350.50 -3.30 -0.93 344.75 1.67
LME Alum 1956.00 0.00 +0.00 2020.00 -3.17
LME Cu 7732.75 7.75 +0.10 7600.00 1.75
LME Lead 1901.25 -4.75 -0.25 2034.00 -6.53
LME Nickel 17010.00 80.00 +0.47 18650.00 -8.79
LME Tin 19085.00 -65.00 -0.34 19200.00 -0.60
LME Zinc 1890.00 -8.00 -0.42 1845.00 2.44
SHFE Alu 15700.00 30.00 +0.19 15845.00 -0.92
SHFE Cu* 56090.00 10.00 +0.02 55360.00 1.32
SHFE Zin 14820.00 20.00 +0.14 14795.00 0.17
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
