RTRS:METALS-Copper slips as ECB meeting stimulus hopes fade
* China adds to budget for infrastructure spending
* China trader says stimulus hopes behind copper strength
* Coming up: Euro zone Retail sales for July at 0900 GMT
(Adds quotes, detail, updates prices)
By Melanie Burton
SINGAPORE, Sept 5 (Reuters) - London copper eased on
Wednesday as hopes dimmed for an imminent easing announcement by
the European Central Bank at a meeting this week, but news of a
boost to China's railroad spending helped cushion losses.
France and Italy want the ECB to agree on measures to reduce
the crippling borrowing costs for southern eurozone states, but
the bank is expected to outline rather than detail its strategy
at the meeting on Thursday.
Stimulus measures, however, may still be on the agenda after
a string of grim factory reports from top metals user China, the
United States and Europe this week, which darkened the outlook
for metals demand.
"If there is an announcement of more free money from the
U.S. or EU or government-mandated spending on construction in
China, obviously this is going to put the wind behind copper's
sails," said Matt Fusarelli, analyst at Australia-based
consultancy AME Group.
"Things are cooling down in China but we're still expecting
demand growth of 5 percent for copper, in part due to the roll
out of electricity projects. We are expecting copper to
outperform other metals over the next six months."
In a bid to boost confidence in its economy, China has
rolled out a series plans for infrastructure spending and
increased its target for railway construction this year to 496
billion yuan ($78.14 billion) from 470 billion yuan
previously.
Three-month copper on the London Metal Exchange was
trading at $7,611.75 per tonne by 0705 GMT, falling 0.3 percent
from Tuesday when it ended down about 0.5 percent.
Copper hit a one-week high of $7,700 on Monday but has
struggled to find momentum in recent months and has remained
below $8,000 since mid-May, down from a 2012 peak of $8,765 per
tonne in February.
The most-traded December copper contract on the Shanghai
Futures Exchange closed down 0.52 percent at 55,730
yuan ($8,800) per tonne.
European shares were expected to open fractionally lower on
Wednesday after sharp losses in the previous session as
investors trimmed their expectations for imminent central bank
intervention in Europe and braced for another batch of weak
data.
The global manufacturing downturn gathered pace in August,
with output and new orders falling at the fastest in more than
three years, a business survey showed.
This week, China's official PMI fell below 50 for the first
time since November, while a similar survey from Markit,
sponsored by HSBC, showed activity shrinking at the fastest pace
since March 2009.
A trader in China's Guangzhou province said anticipation of
further easing by Beijing had been supporting domestic prices.
However, the trader said he saw copper prices falling as strong
U.S. equities attracted investors and Chinese industrial demand
growth moderated.
"We are less enamoured by base metals at this stage.
Although an easing play should benefit the complex, any upside
advance here will run headlong into the fact that Chinese demand
is slowing markedly," INTL-FC Stone said in a research note.
PRICES
Base metals prices at 0705 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7611.75 -23.25 -0.30 0.15
SHFE CU FUT DEC2 55730 -290 -0.52 0.67
HG COPPER DEC2 346.10 -0.80 -0.23 0.73
LME Alum 1929.75 -14.75 -0.76 -4.47
SHFE AL FUT DEC2 15500 15 +0.10 -2.18
LME Zinc 1866.75 -9.25 -0.49 1.18
SHFE ZN FUT DEC2 14795 -55 -0.37 0.00
LME Nickel 15923.00 8.00 +0.05 -14.90
LME Lead 1993.25 -1.75 -0.09 -2.05
SHFE PB FUT 15210.00 -45.00 -0.29 -0.49
LME Tin 19451.00 -149.00 -0.76 1.31
LME/Shanghai arb^ 796
Shanghai and COMEX contracts show most active months
