MARKETS-METALS (UPDATE 3)
* China to drain 213 billion yuan from economy this week
* LME copper stocks at 2 month lows
* Investors await U.S CPI, weekly jobless claims
(Adds fresh comment/details, changes dateline from Singapore)
By Maytaal Angel
LONDON, March 18 (Reuters) - Copper edged lower on Thursday weighed down by a stronger dollar and investor worries that monetary tightening in China, the world's top copper user, might cap demand.
Benchmark copper for three-months delivery on the London Metal Exchange traded at $7,485 a tonne at 1035 GMT from a close of $7,534 on Wednesday.
"Generally what we see is this push and pull between stronger demand coming through outside China, but concerns about tighter monetary policy in China and potential slower economic growth there," said Gayle Berry, analyst at Barclays Capital.
In its latest measure to cut the amount of cash surging through the economy, China's central bank is set to mop up a massive 213 billion yuan ($31 billion) in its open market operations this week.
Fears of further moves by Beijing to tighten credit, after two increases in reserve ratios so far this year and a clampdown on lending, have contributed to jitters in equity and commodity markets across the globe.
"They are tightening and have been all week but the concern is whether they start to raise interest rates. At the end of the day, throughout last year, everybody relied on growth in China," said William Adams, analyst at BaseMetals.com.
Also weighing on copper, the dollar rose versus a currency basket as investors trimmed short dollar positions ahead of U.S. consumer inflation readings. A stronger dollar makes dollar priced metals costlier for non-U.S. investors
Copper hit a one week high on Wednesday on follow-through momentum from the U.S. Federal Reserve's pledge late Tuesday to keep interest rates near zero for an extended period.
Investors awaited the latest U.S. consumer inflation data, due at 1230 GMT, U.S. initial jobless claims and the Chicago Fed January midwest manufacturing index for further clues on the growth outlook for the world's largest economy.
OUTSIDE CHINA
Limiting losses in copper, LME data showed copper stocks fell 1,400 tonnes to total 524,175 tonnes, their lowest since mid-January, giving investors further evidence that demand outside China is recovering.
LME copper stocks are expected to fall further in the second quarter, traditionally the strongest for metals demand.
Among other industrial metals, aluminium was at $2,287 a tonne from $2,295, under pressure from data showing LME stocks rose 72,175 tonnes to total a near record 4.61 million tonnes.
Stainless steel ingredient nickel was at $22,260 from $22,250, having rallied around 20 percent this year, making it the strongest performer of the base metals metals complex.
A strike in Canada, delays in bringing the New Caledonia Goro mine into production and most recently, a problem at BHP Billiton's Nickel West operation in Kwinana, Australia, have helped lift prices.
Zinc was at $2,331 from $2,345, battery material lead was at $2,248.25 from $2,255, while tin was at $17,660 from $17,750.
Metal Prices at 1034 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 338.35 -2.65 -0.78 334.65 1.11 LME Alum 2280.00 -15.00 -0.65 2230.00 2.24 LME Cu 7478.00 -56.00 -0.74 7375.00 1.40 LME Lead 2240.00 -15.00 -0.67 2432.00 -7.89 LME Nickel 22190.00 -60.00 -0.27 18525.00 19.78 LME Tin 17610.00 -140.00 -0.79 16950.00 3.89 LME Zinc 2326.00 -19.00 -0.81 2560.00 -9.14 SHFE Alu 16675.00 -145.00 -0.86 17160.00 -2.83 SHFE Cu* 59540.00 -600.00 -1.00 59900.00 -0.60 SHFE Zin 18715.00 -280.00 -1.47 21195.00 -11.70 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
