MARKETS-METALS (UPDATE 4):METALS-Copper slides on dollar, economic uncertainty
* Copper stocks rise, aluminium stocks dip
hikes price forecasts for copper
* Sentiment still bruised by poor U.S. jobs data
(Adds detail, updates prices)
By Rebekah Curtis
LONDON, July 6 (Reuters) - Copper fell more than 3 percent to near two-week lows on Monday as the dollar strengthened and investors fretted over how long it would take major economies to overcome recession, allowing demand to recover.
Copper for three-months delivery on the London Metal Exchange traded at $4,845 a tonne at 1108 GMT from a close of $5,000 on Friday. Prices of the metal used in power and construction hit a day's low of $4,842.25.
Also hurting sentiment, copper stocks at LME warehouses rose 900 tonnes to 269,175 tonnes and the ratio of cancelled warrants -- material tagged for delivery -- stood at about 5 percent, compared with a hefty 20 percent in mid-May.
"The stronger dollar's the main factor, and copper stocks increasing," said Robin Bhar, an analyst at Calyon, adding that prices had run ahead of fundamentals in recent weeks as investors clung to expectations of economic recovery.
"We've had the hopes and expectations and now the reality sets in that the green shoots are going to take a long time to grow into flowering shrubs," Bhar said.
"It may be that we get a very rocky recovery. There are risks that we could fall back into recession again."
DOLLAR STRENGTH
The dollar rose against a basket of major currencies, as China played down chances of changes in the dollar's reserve status. A stronger U.S. currency makes metals priced in dollars more expensive for other currency holders.
Adding to poor sentiment was weaker than expected U.S. jobs data last week that raised questions about the prospect of economic recovery
"The payroll setback should ripple through the markets for at least a few days," MF Global said in a note, referring to the jobs data.
"In the least, the employment data should resurrect fears of a 'W'-shaped recession, where a deceptive period of a recovery is snuffed out by yet another downturn."
Other data knocking sentiment included weak euro zone PMI and retail sales data released last week.
Copper has risen nearly 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.
But analysts warn this support from China is tailing off, and that prices will struggle to make headway in the quieter trading season over the northern hemisphere summer.
However, Morgan Stanley last week raised its 2009 copper price forecast by 48 percent and its 2010 price forecast by 52 percent, partly driven by a strong recovery in China, the world's largest consumer of the industrial metal.
Among other industrial metals, aluminium was at $1,587 from $1,601. Stocks of aluminium dipped 1,375 tonnes, holding close to a record high near 4.4 million tonnes. The metal, used in transport and packaging, hit a day's low of $1,585.50, its lowest since June 23.
Zinc was at $1,518 from $1,565, while battery material lead was at $1,653.25 from $1,710.
Tin was at $14,240 from $14,350, and nickel was at $15,450 from $16,205. Tin traded in a backwardation -- a premium for cash material over the three-month contract -- of $73, with traders concerned about liquidity in the tin market looking ahead. Metal Prices at 1110 GMT Metal Last Change Percent Move End 2008 Ytd Percent
move COMEX Cu 220.15 -8.85 -3.86 139.50 57.81 LME Alum 1582.00 -19.00 -1.19 1535.00 3.06 LME Cu 4846.00 -154.00 -3.08 3060.00 58.37 LME Lead 1649.00 -61.00 -3.57 999.00 65.07 LME Nickel 15400.00 -1050.00 -6.38 11700.00 31.62 LME Tin 0.00 -14750.00 -100.00 10700.00 -100.00 LME Zinc 1515.00 -50.00 -3.19 1208.00 25.41 SHFE Alu 13400.00 -90.00 -0.67 11540.00 16.12 SHFE Cu* 38860.00 -1000.00 -2.51 23840.00 63.00 SHFE Zin 13230.00 -150.00 -1.12 10120.00 30.73 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
