Shanghai copper rose two percent on Tuesday, chasing gains in London in the previous session, as worries over weak consumption and oversupply vied with hints the sickly U.S. housing sector may be on the mend. After solid results from U.S. home improvement retailer Lowe's Cos Inc sparked a Wall Street rally on Monday, the market is looking for positive housing data later on Tuesday. Analysts expect the rate of groundbreaking for new homes to rise in April but see it being tempered by the glut of unsold homes, a Reuters poll showed. [ID:nN18347358] Third-month benchmark Shanghai copper rose 2.1 percent to 35,990 yuan a tonne by midday, after falling nearly 2 percent in the previous session. "Shanghai copper has been rather stuck, and has shown no clear direction recently. Despite weaker sentiment, prices are not going to decline fast, as bears have so far failed to actively hammer down prices," said Lin Yuhui, deputy general manager at Jinhui Futures. On the London Metal Exchange, copper for three-month delivery edged down $8 to $4,512 a tonne by 0331 GMT, easing after a 1.6 percent gain on Monday spurred by U.S. stocks rally and the chance of improving housing data. Despite that fresh optimism, fundamentals still look weak, traders and analysts said. "Copper arrivals in China in May are likely to be on the same level of April. The domestic spot market is sluggish, and demand is weak. Copper will probably stay soft in the absence of major upbeat news," said a Shanghai-based trader. The arbitrage between Shanghai and London has closed, with the benchmark London price 37 yuan higher than Shanghai, after including China's 17 percent VAT, compared to a Shanghai premium of over 1,700 yuan a month earlier. However, LME copper inventories continued to fall on Monday. Stocks dropped 4,250 tonnes to 353,550 tonnes, their lowest since early January. Cancelled warrants -- material earmarked for delivery -- fell for the third straight day to 59,850 tonnes, down 1,450 tonnes from a day earlier. The ratio to the total tonnage eased to just below 17 percent, compared to nearly 20 percent a week earlier. LME zinc gained $7 to $1,525, while Shanghai zinc rose 1.3 percent to 12,895 yuan. "It will be hard for zinc to break below 12,000 yuan a tonne, which is close to the production cost of the metal. Prices nearer that level will attract buyers," said the Shanghai-based trader. The news that Hunan Nonferrous Metals <2626.HK> plans to build up stocks of metals, including zinc and lead, has also lent support to zinc prices, some analysts said. [ID:nSP478705] Base metals prices at 0331 GMT Metal Last Change Pct Move End 2008 Pct chg 09 LME Cu 4512.00 -8.00 -0.18 3060.00 47.45 SHFE Cu* 35990.00 740.00 +2.10 23840.00 50.96 LME Alum 1516.00 -4.00 -0.26 1535.00 -1.24 SHFE Alum* 12750.00 45.00 +0.35 11540.00 10.49 COMEX Cu** 207.55 0.00 +0.00 139.50 48.78 LME Zinc 1525.00 7.00 +0.46 1208.00 26.24 SHFE Zinc 12895.00 165.00 +1.30 10120.00 27.42 LME Nickel 12375.00 25.00 +0.20 11700.00 5.77 LME Lead 1490.00 5.00 +0.34 999.00 49.15 LME Tin 13550.00 -100.00 -0.73 10700.00 26.64 LME/Shanghai arb^ 37 Dollar/yuan 6.8246 \ 6.8256 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month

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