RTRS:METALS-Copper up 2 percent on strong China manufacturing data
* Financial investors cut net long positions last week
* Codelco's copper output down 1 percent in first half
By Silvia Antonioli
LONDON, Sept 2 (Reuters) - Copper rose 2 percent on Monday as strong manufacturing data from top metals consumer China boosted optimism about metals demand prospects.
China's factories had their best growth in months in August as domestic demand made up for weak exports, purchasing managers' indices (PMI) showed.
Three-month copper on the London Metal Exchange was up 1.9 percent at $7,231.75 a tonne by 1006 GMT, after hitting a session high of $7,276.50 a tonne.
Copper gained 3.2 percent in August, its biggest monthly rise since May. Prices hit a three-week low of $7,081.50 a tonne on Friday.
"The Chinese PMI came in better than expected and the sector remains in expansive territory. This is definitely lending support to base metals this morning," said Commerzbank analyst Daniel Briesemann.
"The data shows the Chinese economy is on a track to regain strength and that should be reflected in higher demand for metals."
Separately, a private sector report showed that China's factory activity expanded for the first time in four months in August, and an official report at the weekend showed activity grew at the fastest pace in more than a year with a jump in new orders.
Analysts also appeared confident that PMI data due in other countries over the next few days will confirm that the global economy is reviving and will support the metals sector.
SUPPLY CONCERNS
Financial investors grew slightly less optimistic on copper last week. Hedge funds and money managers cut bets in futures and options of U.S. copper markets for the week ended Aug. 27, a report by the Commodity Futures Trading Commission showed on Friday.
"Historically speaking, this is a relatively low level of optimism that is unlikely to pose any obstacle to rising prices," Commerzbank said in a note.
Investors were also weighing the risk of supply tightness due to diminishing ore grades or potential labour strikes which have already disrupted operations at some of the world's largest copper mines in the past.
Codelco, the world's largest copper miner, said on Friday, its output of the metal in the first half of the year fell 1 percent to about 758,000 tonnes because of diminishing ore grades and harder mineral in its deposits.
