SHANGHAI - London copper fell nearly 1 per cent, weighed by a rise in the US dollar and concern about a supply surplus in China, the world's top consumer of industrial metals. Sluggish spot prices in China imply that demand in the physical market is rather weak, analysts and traders said. "A strong rally is impossible when spot prices are so much lower than futures prices. We are in the peak consumption season, but abundant supply is pressuring prices," said Liu Xu, an analyst at China International Futures. "The LME's strong rally may well be a flash in the pan - if China's copper imports are lacklustre, as many have expected, LME can't possibly rise much further without support from China." Three-month copper on the London Metal Exchange fell 1 per cent to $US7,773 a tonne by 0701 GMT, after hitting a 19-month high of $US7,878 in the previous session. LME copper is on course for a gain of more than 5 per cent for the three months ending March 31 - its fifth straight quarterly gain. Shanghai's benchmark third-month copper futures contract ended down 0.6 per cent to 61,320 yuan a tonne, on a winning run of five-straight quarters, with a 2.4-per cent gain. The most-active contract for July delivery was down 0.7 per cent at 61,630 yuan a tonne. Spot copper was quoted at 60,325 yuan a tonne, about 400 yuan lower than the front-month futures contract on the Shanghai Futures Exchange. "Chinese are selling on London. The strong LME, weak Shanghai situation may continue for a while," a Shanghai-based trader said. "Upbeat data out of the US showed signs of recovery, boosting confidence in the market outside China. But Chinese investors are less confident, concerned about possibly more monetary tightening moves by the government and high copper inventories." But if LME copper resumed a strong rally for a few more days, Shanghai copper might eventually catch up, analysts said. The dollar hit a 3-month high against the yen on Wednesday as the Japanese currency lost ground broadly. The dollar index was little changed, holding below a 10-month high of 82.240 set last week. US consumer confidence rebounded in March, while home prices rose in January for the eighth-straight month according to a closely watched housing index, bolstering hopes for a sustainable economic recovery. Investors are eyeing the US March non-farm payroll data, scheduled to be released on Friday, for more clues of an improving economy. LME aluminium inched down $US2 to $US2,292 a tonne, after hitting a more than 2-month high of 2,314.50 in the previous session, on course for a fourth quarter of straight gains. LME zinc, snapping a four-quarter winning run, is heading for a quarterly loss of 9 per cent.

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