DY: Stronger dollar keeps copper near four-month lows
By Pratima Desai
LONDON, June 10 (Reuters) - Copper steadied on Friday, but held near four-month lows as revived expectations of a rise in U.S. interest rates boosted the dollar and added to pressure from weak demand growth in top consumer China.
Benchmark copper on the London Metal Exchange traded little changed at $4,519 a tonne in official rings from Thursday's close at $4,516. It hit $4,483.50, its lowest since Feb. 12, on Thursday.
The dollar index rose after an unexpected drop in weekly U.S. jobless claims soothed worries about Chinese economic growth and increased the possibility of a U.S. rate rise in June or July.
The jobless claims offset last Friday's weak U.S. jobs data for May, which were interpreted to mean the Federal Reserve would delay a rate hike.
A firmer dollar makes dollar-denominated metals more expensive for non-U.S. buyers -- a relationship used by funds and traders for short-term trading strategies.
"It's all to do with the dollar at the moment," said Citi analyst David Wilson. "We're edging into the summer season, when the physical market tends to be softer."
Also weighing on copper this week was the large amount of metal delivered into LME approved warehouses. Stocks were up more than 18 percent at 213,225 tonnes on June 8, though the latest data shows LME copper stocks fell 2,550, which traders said could support prices in the short term.
Longer term, however, weak Chinese demand growth and an oversupplied market are expected to limit attempts to push up prices significantly.
"Copper is not only being capped at $4,700 per tonne by China's weak consumption rate, but by a lack of mine supply disruptions and a strengthening dollar," Morgan Stanley analysts said.
Three-month aluminium climbed 0.5 percent to $1,585.5 a tonne, lead was up 1.7 percent at $1,731, tin added 0.7 percent to $17,150 and nickel gained 0.7 percent to $8,995.
Zinc rose 0.5 percent to $2,088. It is up more than 40 percent from January lows.
The metal used to galvanise steel hit $2,105.5 on Thursday, its highest since the middle of last July, on expectations that mine closures will cause shortages.
"Zinc prices are overdone. People have jumped on it because it's one of the few fundamentally positive stories in base metals," Wilson said.