LONDON, April 6 (Reuters) - Copper hit a 20-month high above $8,000 a tonne on Tuesday, as robust U.S. jobs, service sector and housing data buoyed demand hopes.
By 1039 GMT, copper for three month delivery CMCU3 on the London Metal Exchange traded at $7,960 a tonne from $7,885 at the close on Thursday.
Copper, used in power and construction, earlier hit $8,009.75 after resuming trade following the four-day Easter holiday weekend -- its highest level since August 2008.
"It was the good economic data in the United States," said Eugen Weinberg, an analyst at Commerzbank. "Unemployment data last week, the ISM data yesterday and also pending home sales were better than expected.
"The data we've been recently seeing, continues to point to a continuous strong, robust recovery," he added. "The market is getting more and more optimistic."
Nonfarm payrolls rose 162,000, the U.S. Labor Department said on Friday, the largest number of jobs added in three years. [ID:nN01126422]
Separate reports showing pending sales contracts for existing homes rose unexpectedly in February and further expansion in the U.S. services sector added to the market's upbeat sentiment. [ID:nN05117920] The United States is the world's largest economy.
But Weinberg added that recent copper price rises had been mostly driven by positive demand expectations rather than the fundamentals, which increases the risk to the downside.
The red metal rose 5.5 percent in the first quarter, after climbing 140 percent in 2009, as a combination of improving macro data, a weaker dollar, and fund and Chinese buying supported prices. [ID:nLDE62U1VJ]
Further monetary tightening from China, the world's largest metals consumer, persists however to cap gains.
Last week, data showed that China's vast manufacturing sector picked up speed in March, and could spur further policy tightening. [ID:nTOE63001J]
On Tuesday's economic calendar, the U.S. Federal Reserve is due to release its latest policy meeting minutes at 1800 GMT, which may offer further clues on monetary and fiscal policies.
Also boosting industrial metals prices in recent weeks, have been falls in LME warehouse stocks, coupled with rises in cancelled warrants -- material earmarked for delivery.
On Tuesday however, copper cancelled warrants were at 16,125 tonnes compared with 29,800 tonnes on March 1, suggesting that the economic and demand recovery may be slow and protracted.
"You used to be able to think that a big pick-up in cancelled warrants was metal being moved for consumption," said David Wilson, director of metals research at Societe Generale. "But it's never a clear picture these days -- with more speculative elements moving metal from one side of the line to the other.
"(But) prices have been quite impressive ... it's on the back of the stronger than expected payroll data," he added. "Our view on copper is that this year's demand recovery was already priced in last year, so less upside."
Aluminium CMAL3 traded at $2,365.50 versus a final bid at $2,351 on Thursday, after earlier hitting a three-month high at $2,375.
Among other base metals, steel making ingredient nickel CMNI3 traded at $24,964 from $25,050 while battery material lead CMPB3 was at levels not seen in three weeks at $2,247.75 from $2,190.
Speculators have been active in the nickel market in recent weeks, with LME last week's data showing a dominant position controlling between 50-80 percent of cash warrants. [LME/WC]
The discount between the cash and three-month contract MNI0-3, at $39 a tonne, is more than half $83 on March 1.
Zinc CMZN3 traded at $2,421 a tonne from $2,404 and tin CMSN3 was at $18,500 from $18,450.
For stories from the world's biggest copper gathering this week at the CRU/CESCO conference in Chile, click nCOPPER
Metal Prices at 1040 GMT Metal Last Change Pct Move End 2009 Ytd Pct
move COMEX Cu 360.50 -2.10 -0.58 332.75 8.34 LME Alum 2362.00 39.00 +1.68 2230.00 5.92 LME Cu 7955.00 70.00 +0.89 7375.00 7.86 LME Lead 2246.00 56.00 +2.56 2432.00 -7.65 LME Nickel 24875.00 -175.00 -0.70 18525.00 34.28 LME Tin 18350.00 -100.00 -0.54 16950.00 8.26 LME Zinc 2416.00 12.00 +0.50 2560.00 -5.63 SHFE Alu 16815.00 105.00 +0.63 17160.00 -2.01 SHFE Cu* 63110.00 290.00 +0.46 59900.00 5.36 SHFE Zin 19485.00 180.00 +0.93 21195.00 -8.07 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Additional reporting by Nick Trevethan in Singapore)
(Reporting by Michael Taylor; editing by Keiron Henderson)
