* Gains in line with rise in Asian stocks after Intel results, outlook
* LME cash copper premium vs 3-mth price widens (Updates prices to Shanghai close)
By Manolo Serapio Jr.
MANILA, July 15 (Reuters) - Shanghai copper rose 4 percent to its best level in a month on Wednesday, leading other base metals higher, as improved corporate earnings helped whet investors' risk appetite for commodities and equities.
Asian stocks rose for a second day running as blockbuster results from tech bellwether Intel Corp suggested a better U.S. earnings season and a recovery in global consumer demand. [MKTS/GLOB]
"There's some risk appetite coming back and spilling over into the base metals market," said analyst Yingxi Yu at Barclays Capital.
"But I don't think any real fundamental changes have occurred in the short term to bring about this change."
Shanghai's third month copper jumped 1,620 yuan to 41,410 yuan ($6,063) a tonne at the close. It touched a session-high of 41,570 yuan, its loftiest since June 12, and just off the daily ceiling of 41,720 yuan.
The most-active October contract rose 4.1 percent to 41,340 yuan.
Three-month copper on the London Metal Exchange (MCU3) rose $85 to $5,130 a tonne by 0708 GMT, after touching a two-week top of $5,150 earlier.
The premium in LME cash copper over the three-month price widened to $13/$17, the widest since mid-October, after flipping into backwardation for the first time since May at the start of the week.
The backwardation reflects the continued decline in LME copper stocks over the past months, traders said, with inventory of the metal in London easing another 325 tonnes to 256,900 tonnes on Tuesday, less than half their February peak.
"We heard, and this is only market rumor, that there's someone holding a big, long position and also holding some warrants as well, trying to squeeze people holding on short," said Macquarie analyst Bonnie Liu.
Traders say the tightening in the cash market was probably a short-term squeeze rather than a sign that consumers were anxious to secure raw material supplies. [ID:nSP373804]
"The market outside of China does seem to be tighter than earlier expected, but whether or not the backwardation can be sustained is difficult to call," said Barclays' Yu.
Yu said a key factor to watch for was the price spread between Chinese domestic prices and LME, to determine how strong Chinese imports might be going forward.
Third month Shanghai futures were 405 yuan a tonne higher than their LME equivalent on Wednesday, taking into account China's 17 percent VAT, around the level that could make imports worthwhile.
"Our initial sense is probably that Chinese imports will ease over the next few months but perhaps not by the magnitude earlier expected given the continued tightness in scrap markets," she said.
The world's biggest consumer of copper, China has imported an estimated 1.8 million tonnes of refined copper in the first half of 2009 -- almost a quarter of all the copper produced outside the country during the period. Base metals prices at 0708 GMT Metal Last Change Pct Move End 2008 Pct chg 09 LME Cu 5130.00 85.00 +1.68 3060.00 67.65 SHFE Cu* 41410.00 1620.00 +4.07 23840.00 73.70 LME Alum 1610.00 5.00 +0.31 1535.00 4.89 SHFE Alum* 13525.00 130.00 +0.97 11540.00 17.20 COMEX Cu** 232.00 3.00 +1.31 139.50 66.31 LME Zinc 1519.00 24.00 +1.61 1208.00 25.75 SHFE Zinc 13220.00 325.00 +2.52 10120.00 30.63 LME Nickel 15950.00 375.00 +2.41 11700.00 36.32 LME Lead 1622.00 27.00 +1.69 999.00 62.36 LME Tin 13050.00 150.00 +1.16 10700.00 21.96 LME/Shanghai arb^ -405 Dollar/yuan 6.8317 \ 6.8341 ** 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 Clarence Fernandez)
