RTRS:METALS-Copper inches up, eyes euro zone funding stress
* Copper edges up before Spanish debt sale, China holidays
* China markets close for Lunar New Year on Jan. 22
* Coming Up: euro zone industrial production; 1000 GMT
(Adds trader comment, updates prices)
By Melanie Burton
SHANGHAI, Jan 12 (Reuters) - Copper edged up on
Thursday after steep gains in the previous session, with
investors cautious ahead of a Spanish debt auction and as
Chinese buying wound down before the Lunar New Year holidays.
Three-month copper on the London Metal Exchange
traded up 0.5 percent at $7,825 a tonne at 0706 GMT.
The most-traded March copper contract on the Shanghai
Futures Exchange climbed 0.95 percent to 57,400 yuan
($9,100) a tonne.
Copper hit a one-month high on Wednesday, building on the
previous session's three-percent price surge after data that
showed China in December imported record volumes of copper
imports at than 500,000 tonnes.
However, slim order books at Chinese end-users suggested the
domestic demand outlook was weakening ahead of the holiday
period, said Judy Zhu, an analyst at Standard Chartered in
Shanghai.
"The demand picture here in China is quite mixed. We have
heard that some of the home appliance makers are reporting very
weak order books in January and February and will start their
holidays from next week," she said.
"Still, the price range for copper in the near term will be
between $7,000 and $8,000. The bond auction today will also be
key," Zhu said.
China's offices and exchanges will be shut in the week of
Jan. 22 because of the Lunar New Year holidays, traditionally a
weak period for copper consumption.
Spain's debt auction on Thursday and Italy's bond sale on
Friday are this week's major risk events.
"Foreign exchange desks in Western banks would be concerned
about the bond sale, and use it as a reason not to do a lot. The
reality is, at the moment, if there is an excuse to stay a
little bit sidelined then people will use it," said a
Singapore-based trader.
"People are trying not to do too much ahead of Chinese New
Year."
Markets are also closely watching the outcome of the
European Central Bank (ECB) policy meeting, a day after the head
of sovereign ratings for Fitch warned the ECB should ramp up its
buying of troubled euro zone debt to support Italy and prevent a
"cataclysmic" collapse of the euro.
Traders said an easing in Chinese inflation may
help spur buying after the Lunar New Year break, as the
government is now expected to focus less on putting a brake on
prices and more on stimulus measures.
China's annual inflation fell to 4.1 percent December, the
lowest level in 15 months. If easier monetary policy seeps into
end-user markets, it may help support price for copper as buyers
will have more liquidity.
An improving technical picture may also help to underpin
prices, Credit Suisse said in a research note.
"After the positive performance since the beginning of the
year, technical analysis is also becoming more positive. The
momentum reading for most of the sector is now moving from
negative to neutral," it said.
Copper popped through the 100-day moving average at $7,718 a
tonne which is a buy signal in the commonly used in chart
analysis, aiding technical momentum, traders said.
Base metals prices at 0706 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7825.00 40.00 +0.51 2.96
SHFE CU FUT MAR2 57400 540 +0.95 3.68
HG COPPER MAR2 355.65 1.05 +0.30 3.51
LME Alum 2167.00 2.00 +0.09 7.28
SHFE AL FUT APR2 16215 -30 -0.18 2.34
LME Zinc 1932.00 -4.00 -0.21 4.72
SHFE ZN FUT MAR2 15185 105 +0.70 2.64
LME Nickel 19490.00 40.00 +0.21 4.17
LME Lead 2000.00 10.00 +0.50 -1.72
SHFE PB FUT 15400.00 65.00 +0.42 0.75
LME Tin 20500.00 25.00 +0.12 6.77
LME/Shanghai arb^ 434
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus
SHFE third month
