* Copper set for third consecutive weeks of falls
* Equities fall, gold at record high as risk aversion takes hold
* Aluminium stocks show influx into Vlissingen
By Harpreet Bhal
LONDON, Aug 19 (Reuters) - Copper steadied on Friday, pausing for breath
after the previous session's hefty falls, although growing concerns about a
slowdown in the United States and a debt crisis in Europe weighed on sentiment
and capped further gains for the metal.
Benchmark copper was trading at $8,786 at 0920 GMT, up slightly from
Thursday's close of $8,774 a tonne. The metal used in power and construction
earlier fell to a low of $8,700, its lowest level since August 11.
"Short-term we are negative on base metals and we think that cautiousness is
warranted at this point in time," said Arne Lohman Rasmussen, analyst at Danske
Bank.
Investors have grown increasingly uneasy after disappointing data from the
United States prompted fears a slowdown in the world's largest economy would hit
global growth prospects, compounded by a worsening debt crisis in the euro zone.
Investors dumped assets perceived as risky, such as stocks, in favour of
safe-haven gold, which surged to a fresh record high.
The dollar edged lower against a basket of currencies, offering a modest
boost to metals prices. A weak dollar makes commodities priced in the U.S. unit
cheaper for holders of other currencies.
"We know that there are some long positions (in base metals) out there that
could easily be squared out especially if we start to see euro/dollar moving
lower and we see a risk of that," Rasmussen said.
Copper prices have fallen more than 10 percent so far this month, and are on
track to post a third consecutive week of falls.
FUNDAMENTALS INTACT
Supply threats in Latin America are also on investors radar screens. Workers
at Chile's Collahuasi, the world's No. 3 copper mine, have threatened a one-day
stoppage on Sept. 2 if the company does not hire back workers fired after a
previous disruption.
"Setting aside the weak macro environment, copper's fundamentals remain
well-supported. Risks of short-term disputes and potential supply outages
remain," ANZ said in a note.
In a further boost to copper, inventories in warehouses monitored by the
Shanghai Futures Exchange fell 7.3 percent from last Friday, raising
expectations that destocking in China was under way . Aluminium stocks
fell by 5.8 percent.
"China has already taken advantage of the fall in prices since the start of
the month and bought copper especially in anticipation of a global supply
deficit. This should be reflected in higher imports in the coming months,"
Commerzbank said in a note.
"Copper imports have already picked up again in the last two months, not
least because of attractive arbitrage opportunities between the exchanges in
London and Shanghai."
China accounts for nearly 40 percent of global copper demand, estimated at
around 19 million tonnes this year.
Data from the London Metal Exchange (LME) showed aluminium stocks in
warehouses monitored by the LME rose by 104,425 tonnes, with large inflows into
the Dutch port of Vlissingen.
About 70 percent of aluminium stocks are tied up in financing deals, and
analysts say these deals are unlikely to be unwound soon given the limited
money-making opportunities available to banks facing historically low interest
rates.
A typical deal consists of banks buying nearby aluminium from a producer,
selling it forward at a profit and striking a warehouse deal to store it cheaply
for an extended time period.
Aluminium was trading at $2,330 a tonne. It was untraded at the
close on Thursday, but bid at $2,338 a tonne.
Tin rose to $23,001 after closing at $22,750 on Thursday when it
fell by more than 5 percent.
Zinc fell to £2,170 from $2,178 while lead fell to $2,291
from Thursday's close of $2,301. Nickel slipped to $21,290 from $21,300.
Metal Prices at 0919 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2010 Ytd Pct
move
COMEX Cu 396.30 -0.30 -0.08 444.70 -10.88
LME Alum 2338.00 -57.00 -2.38 2470.00 -5.34
LME Cu 8769.00 -5.00 -0.06 9600.00 -8.66
LME Lead 2300.50 -0.50 -0.02 2550.00 -9.78
LME Nickel 21300.00 0.00 +0.00 24750.00 -13.94
LME Tin 22750.00 0.00 +0.00 26900.00 -15.43
LME Zinc 2178.00 0.00 +0.00 2454.00 -11.25
SHFE Alu 17250.00 45.00 +0.26 16840.00 2.43
SHFE Cu* 66350.00 -350.00 -0.52 71850.00 -7.65
SHFE Zin 16885.00 -145.00 -0.85 19475.00 -13.30
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
