FRX: METALS Copper slips as jobs data stoke economy worries
* U.S. June job data disappoints
* Analysts see further downward pressure for copper
* Copper, aluminium stocks rise
(Updates prices and comments)
By Humeyra Pamuk
LONDON, July 3 (Reuters) - Copper slipped on Friday, as U.S. jobs data fuelled worries about the health of the global economy and rising inventories weighed on prices.
Mining shares such as Anglo American, BHP Billiton and Rio Tinto trimmed earlier losses but were still down around half a percent, underperforming Britain's FTSE 100 index <.FTSE, which was up by 0.4 percent. Copper for three months delivery on the London Metal Exchange was at $4,995/$5,000 a tonne in the open outcry trade, versus Thursday's close of $5,035 a tonne. The metal touched a two-week high earlier this week.
"The market may well reasses the green shoots story given the United States is still losing a lot of jobs," said Jesper Dannesboe, senior commodity strategist at Societe Generale.
The United States lost more jobs in June than expected, while the unemployment rate hit 9.5 percent, the highest in nearly 26 years, dimming hopes for a rapid economic recovery.
Copper seemed to trim some of its earlier losses by midday and traders said it was due to short-covering in the quiet market as U.S. markets were on holiday.
"Copper's looking for direction," a trader on the floor of the LME said. "It has been stuck in a range of 4,900-5,200 and I don't think it'll break it any time soon as the news flow is pretty thin."
But with the economy sending mixed signals, analysts say prices are quite exposed to a downward correction.
"It makes sense for the market to say, 'maybe we're going to see weaker than expected data going forward. Maybe this trend we've seen so far was just a bear market rally," he said.
On Friday, surveys showed signs of a recovery in the euro zone's dominant services economy took a backwards step in June but business optimism hit a near two-year high on hopes that the worst was over.
INVENTORIES RISE
LME copper has risen some 63 percent this year, mostly due to Chinese buying, as Beijing took advantage of low prices to build state reserves and its stimulus plan boosted demand for the metal.
However, higher prices mean Chinese interest is fading away.
"As prices increase, you are getting close to that point where they decide they are good enough in stockpile...and there's not much value in the price," said Ben Westmore, commodities economist at National Australia Bank.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 7 percent from one week earlier while LME stocks increased by 4,050 tonnes to 268,275 tonnes, having fallen more than 280,000 tonnes since end-February. Aluminium inventories rose 3,400 tonnes, to above 4.4 million tonnes.
Three-month aluminium was quoted at $1,622/1,622.5, down $8 from Thursday and still within range of its six-month high of $1,701 a tonne, hit early June.
Traders see the reason as a shortage in the near term supplies of aluminium partly because companies with metal are using it as collateral to release cash tied up in stock. In addition, analysts expect budding signs of stability in the ailing U.S. automotive sector to kick-start a quicker demand recovery for aluminium.
Zinc was slightly higher at $1,565/1,566 a tonne from $1,560 on Thursday, while battery material lead was at $1,715 from $1,700. Nickel was lower at $16,350/16,375 from $16,450.
Tin edged down to $14,260 a tonne from $14,300.
For graphics; http://graphics.thomsonreuters.com/079/GLB_ALISTK0307.jpg
