* Speculators' net short positions move from 10,000 to 32,000 lots * Bottlenecks force China copper importers to queue * China's services sector expands modestly in June By Susan Thomas LONDON, July 3 (Reuters) - Copper rose to its highest level in almost two weeks on Monday, fuelled by short covering and bottlenecks in supply, as well as stepped-up copper purchases by Chinese importers in June. Copper prices have pared some of June's steep losses as mine shutdowns have combined with limited delivery from London Metal Exchange-registered warehouses to choke immediate supply. Three-month copper on the London Metal Exchange rose 0.4 percent to $6,940 a tonne, off $6,995.50, its highest level since June 19. It closed at $6,915 on Tuesday. Copper prices racked up losses of more than 7 percent in June and are down more than 12 percent year to date. "We had this long wave in which everyone was quite bearish about the outlook, panicking about China," Standard Chartered analyst Dan Smith said. "I was in Hong Kong last week and the week before and I was arguing quite strongly that we're going to see high prices by year end. We've seen a decent bounce in copper in the last few days, in line with that view." Smith sees copper at $7,000 plus before the end of the year, with $7,000 a key level for the short term, with Chinese base metals demand in reasonably good shape. Also, China's copper importers are being forced by bottlenecks at LME warehousing systems to queue for deliveries of metal they have already bought, resulting in spot copper import premiums rising by a third since mid-June. Reflecting this nearby physical tightness, in the futures market, cash copper jumped in two days from a discount to its highest premium in nearly a year over three-month prices. Still, growth in China's services sector expanded only modestly in June, in a sign that the economy is cooling. In the United States, data on Tuesday showed U.S. new motor vehicle sales in June were poised to record their strongest month in more than 5-1/2 years and factories posted a second straight month of gains in new orders in May, indicating some pick-up in economic activity. Adding to the improving U.S. economic picture, home prices posted their biggest annual increase in more than seven years in May, other data showed on Tuesday. In copper short selling, Macquarie said that over the past three weeks speculators' positioning had moved from net short 10,000 lots on June 11, to net short 32,000 lots on June 25. "This has surpassed the previous record short position of 28,000 lots recorded during the depth of the global financial crisis in February 2009," Macquarie said in a research note. Metal Prices at 1047 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2012 Ytd Pct move COMEX Cu 3.15 0.00 +0.10 365.25 -99.14 LME Alum 1817.25 -10.25 -0.56 2073.00 -12.34 LME Cu 6940.00 25.00 +0.36 7931.00 -12.50 LME Lead 2069.00 -10.50 -0.50 2330.00 -11.20 LME Nickel 13901.00 -139.00 -0.99 17060.00 -18.52 LME Tin 20025.00 -200.00 -0.99 23400.00 -14.42 LME Zinc 1877.50 -14.50 -0.77 2080.00 -9.74 SHFE Alu 14380.00 10.00 +0.07 15435.00 -6.84 SHFE Cu* 50750.00 550.00 +1.10 57690.00 -12.03 SHFE Zin 14630.00 55.00 +0.38 15625.00 -6.37 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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