* Doubts about speedy recovery in global economy linger * Chinese market buoyant with higher liquidity By Rujun Shen and Jacqueline Wong SHANGHAI, July 6 (Reuters) - Copper prices in London and Shanghai fell nearly 1 percent, extending declines from last week as investors remained sceptical about a speedy recovery in the global economy but losses were curbed by an improving demand outlook. Morgan Stanley raised its 2009 copper price forecast by 48 percent, and its 2010 price forecast was raised by 52 percent, partly driven by a strong recovery in China, the world's largest consumer of the industrial metal. "The bullish sentiment is still quite strong in the Chinese market. Once prices fall, investors start to buy. The excessive liquidity has kept prices strong," said Li Rong, an analyst with Great Wall Futures. New lending by Chinese banks is likely to exceed 10 trillion yuan ($1.46 trillion) this year, the Shanghai Securities News reported on Friday. Shanghai copper fell 1.1 percent to 39,430 yuan a tonne by 0212 GMT, after losing 1.3 percent last week. The most-active Shanghai copper contract for October delivery lost 1.2 percent to 39,270 yuan. Copper for three-month delivery on the London Metal Exchange fell 1.3 percent, or $65, to $4,935 a tonne, extending a 1 percent loss from last week. Copper has risen 60 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. "Shanghai's sentiment is slightly warmer than London. The general economic climate in China is quite optimistic, supported by mostly positive economic data in June," said Zeng Chao, an analyst with Everbright Futures, adding that the buoyant stock market has also lent support. The Shanghai composite index has risen 71 percent so far this year. On the LME, copper prices were weighed down by poor U.S. job data as well as weak euro zone PMI and retail sales data released last week reinforced the view that the global economy was still struggling to pull out of recession. Also dampening sentiment, copper inventories in warehouses registered by the LME rose 4.050 tonnes to 268,275 tonnes on Friday, and the ratio of cancelled warrants -- material tagged for delivery -- stood at 5 percent, compared to a hefty 20 percent in mid-May. LME aluminium edged down $1 to $1,600 a tonne, while Shanghai aluminium lost a small 0.2 percent to 13,470 yuan. Base metals prices at 0212 GMT Metal Last Change Pct Move End 2008 Pct chg 09 LME Cu 4935.00 -65.00 -1.30 3060.00 61.27 SHFE Cu* 39430.00 -430.00 -1.08 23840.00 65.39 LME Alum 1600.00 -1.00 -0.06 1535.00 4.23 SHFE Alum* 13470.00 -20.00 -0.15 11540.00 16.72 COMEX Cu** 223.85 -5.15 -2.25 139.50 60.47 LME Zinc 1555.00 -10.00 -0.64 1208.00 28.73 SHFE Zinc 13370.00 -10.00 -0.07 10120.00 32.11 LME Nickel 16050.00 -155.00 -0.96 11700.00 37.18 LME Lead 1705.00 -5.00 -0.29 999.00 70.67 LME Tin 14350.00 0.00 +0.00 10700.00 34.11 LME/Shanghai arb^ 21 Dollar/yuan 6.8326 \ 6.8329 ** 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 (Editing by Ben Tan)

Source