MARKETS-METALS (UPDATE 5)
* Concerns for euro zone banking sector knock down euro
* Copper stocks fall again, down 76,000 tonnes since Feb
(Recasts, updates prices and comments)
By Rebekah Curtis
LONDON, May 26 (Reuters) - Copper gained 2 percent on Wednesday, as rallying equity markets offset a weaker euro and robust macroeconomic data from the United States assured investors that economic recovery there remained intact.
Euro zone debt problems and fears that it could derail the pick-up in growth in the region have not subsided, traders said, warning against further volatility ahead as copper recovered from a 2.5 percent drop on Tuesday.
Copper for three-month delivery on the London Metal Exchange rose nearly 2 percent to $6,844.75 a tonne by 1504 GMT from a close of $6,730 on Tuesday. The metal used in power and construction has lost more than 7 percent so far in May after hitting a 20-month high above $8,000 in April.
"There's so much fear in the market at the moment," said Jesper Dannesboe, senior commodity strategist at Societe Generale. "The market's clearly thinking we are going to see evidence of a potential double dip."
However, he added, the leading indicators so far have not been all gloom and doom. "The leading indicators are not collapsing, and there's no data suggesting double-dip."
New U.S. home sales surged to their highest level in nearly two years in April, while orders for long-lasting manufactured goods rose sharply, pointing to resilience in the economic recovery amid the debt turmoil in Europe.
The Nasdaq rose more than 2 percent as the market extended gains, helped by bargain hunting and the home sales data. The Dow Jones industrial average was up 1.13 percent. European shares have also extended their gains on the back of the U.S..
The dollar extended its gains versus the euro following the U.S. home sales data. The single currency remained under pressure due to persistent debt problems in the eurozone, making metals more expensive for non-U.S. currency holders.
CHINESE DEMAND
Investors have worried this year that Chinese demand is softening as the world's top industrial metals consumer, whose consumption helped copper prices surge 140 percent last year, reins in monetary policy to cool its stellar growth.
But many analysts were upbeat about longer-term prospects for Asian demand, also adding a U.S. recovery was strengthening.
"Sentiment in the long-run is still positive," said Andrey Kryuchenkov, analyst at VTB Capital. "We're still positive about China and the U.S."
Also supporting prices was a consistent decline in copper stocks at LME warehouses, which indicated a pick-up in demand. Inventories last dipped 275 tonnes to 479,050 tonnes, having fallen 76,000 tonnes since they began declining in mid-February.
Stocks of aluminium last fell 3,600 tonnes but were within a whisker of this year's record highs above 4.6 million tonnes.
LME copper's technical signal was neutral, a Reuters analyst said, with moves above $6,966 or down to $6,660 possible, though slightly weighted towards the risk of very limited downside retracement.
Aluminium traded at $2,035 a tonne from $2,017 on Tuesday. Zinc was at $1,895 from $1,855 and battery material lead was at $1,795 from $1,740.
Tin traded at $17,750 from $17,595 and nickel, was bid at $21,500 from $21,200. Metal Prices at 1502 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 308.50 5.15 +1.70 332.75 -7.29 LME Alum 2030.00 13.00 +0.64 2230.00 -8.97 LME Cu 6847.00 -63.00 -0.91 7375.00 -7.16 LME Lead 1791.00 -39.00 -2.13 2432.00 -26.36 LME Nickel 21400.00 200.00 +0.94 18525.00 15.52 LME Tin 0.00 -17595.00 -100.00 16950.00 -100.00 LME Zinc 1889.00 34.00 +1.83 2560.00 -26.21 SHFE Alu 15245.00 70.00 +0.46 17160.00 -11.16 SHFE Cu* 54890.00 750.00 +1.39 59900.00 -8.36 SHFE Zin 15790.00 275.00 +1.77 21195.00 -25.50 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Editing by James Jukwey; Editing by Amanda Cooper)
