RTRS:METALS-Copper sags on shaky economic outlook, dollar
* LME copper reverses early gains, resistance seen at $9,003
* China Q4 copper imports seen up with arbitrage window open
* Euro slips after German GDP disappoints
* Coming Up: U.S. housing starts; 1230 GMT
(Updates prices, adds dollar, zinc)
By Manolo Serapio Jr
SINGAPORE, Aug 16 (Reuters) - London copper futures fell 0.7
percent on Tuesday as a firmer dollar and a tentative outlook
for the global economy prompted investors to cash in on early
gains, although hopes of Chinese buying kept losses in check.
The euro slipped against the dollar after data showed
Germany's economy hardly grew in the second quarter, adding to
global uncertainties ahead of French-German talks on the euro
zone's worsening debt crisis.
An open arbitrage to sell metal to top consumer China
boosted hopes buyers there will snap up copper after prices
dropped 10 percent in the first two weeks of the month.
"Risk appetite has staged a partial recovery. But with the
recent volatility we've seen, those who get nervous easily sell
on rallies," said Citigroup analyst David Thurtell.
"It's a very, very uncertain time."
Three-month copper on the London Metal Exchange
eased $64.25 to $8,844.75 a tonne by 0701 GMT, after rising as
high as $8,953.75 earlier.
Copper, down nearly 8 percent this year, fell to eight-month
lows last week in a commodity-wide rout fed by fears of another
U.S. recession and a widening debt crisis in Europe.
But with three-month LME copper still trading at a 411 yuan
discount to the November copper contract on the Shanghai Futures
Exchange, including China's 17 percent value-added tax, there
remains an incentive for Chinese to import.
The arbitrage window has been open since early this month
and traders say that may boost China's refined copper imports in
the fourth quarter as buyers increase spot bookings.
Technical charts show LME copper faces resistance at $9,003,
only a break of which will trigger a sharp rise to $9,348, said
Reuters market analyst Wang Tao.
The most-active November copper contract on the Shanghai
Futures Exchange SCFc3 fell 1.2 percent to close at 66,490
yuan per tonne.
Investors are eyeing a slew of U.S. data due later on
Tuesday, including housing starts and industrial output, for
more clues about the state of the world's biggest economy after
a recent spate of disappointing indicators.
Data overnight showed manufacturing in the New York area
contracted for the third straight month in August, tempering any
lingering hopes for a rebound in the second half.
Also on the radar is a meeting between French President
Nicolas Sarkozy and German Chancellor Angela Merkel on how to
make the euro zone work more effectively amid persistent doubts
over Europe's ability to solve its sovereign debt crisis.
Elsewhere, Shanghai's third month zinc SZNc3 fell more
than 3 percent to 16,600 yuan a tonne. It fell after hitting the
day's high of 17,175 yuan, just above the 10-day moving average
of 17,096 yuan.
"There was a lot of speculative interest in zinc and people
just decided to sell when it hit the 10-day moving average,"
said a metals trader in Shanghai.
Base metals prices at 0701 GMT
Metal Last Change Pct Move End 2010 YTD pct chg
LME Cu 8844.75 -64.25 -0.72 9600.00 -7.87
SHFE Cu* 66490.00 -790.00 -1.17 71850.00 -7.46
LME Alum 2372.00 -3.00 -0.13 2470.00 -3.97
SHFE Alum* 17150.00 -180.00 -1.04 16840.00 1.84
COMEX Cu** 400.00 -3.15 -0.78 443.95 -9.90
LME Zinc 2158.00 -25.00 -1.15 2454.00 -12.06
SHFE Zinc 16600.00 -575.00 -3.35 19475.00 -14.76
LME Nickel 21404.00 104.00 +0.49 24750.00 -13.52
LME Lead 2370.25 -26.75 -1.12 2550.00 -7.05
LME Tin 24450.00 50.00 +0.20 26900.00 -9.11
LME/Shanghai arb^ -411
Dollar/yuan 6.3855 \ 6.3859
** 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
