RTRS:METALS-LME copper slips, weaker global outlook weighs
* Weak China demand, Europe economic woes drag down copper
* Copper needs clearer China demand signals to break higher
-CS
* Coming Up: U.S. pending home sales, 1500 GMT
(Updates prices)
By Manolo Serapio Jr
SINGAPORE, Feb 27 (Reuters) - London copper futures
fell for a third time in four sessions on Monday, hurt by a
shaky outlook for industrial demand, with rising oil prices
threatening a fragile global economy and Chinese consumption
staying weak.
Copper has risen more than 11 percent so far this year, but
investors have been struggling to push it higher, with poor
demand from top copper consumer China and a debt-strained Europe
countering upbeat U.S. economic data.
"The demand outlook isn't very good and it's mainly because
of weak physical demand in China," said Grace Qu, analyst at CRU
in Beijing.
"We are seeing improving U.S. data, but the European debt
crisis is continuing and China's manufacturing PMI data is still
(contracting)."
Three-month copper on the London Metal Exchange
dropped half a percent to $8,486 a tonne by 0701 GMT, after
posting its best week since mid-January last week.
The most-traded May copper contract on the Shanghai Futures
Exchange rose 1.3 percent to close at 60,400 yuan
($9,600) a tonne, chasing the Friday gains of its LME
counterpart.
Rising energy prices, which touched 10-month highs last
week, stirred the spectre of global recession, with Europe
probably having the most to fear as its brittle economic growth
falters.
Those concerns add to worries about Chinese demand, which
has yet to pick up strongly since the Lunar New Year break in
January.
DIFFICULT
Advance data from HSBC last week already pointed to China's
factory sector contracting for a fourth straight month in
February as new export orders shrank, suggesting any seasonal
recovery in copper demand could be slow.
"While we have a positive outlook for the metals sector, we
think markets will find it difficult to break much higher from
current levels as long as we do not get clearer signals of
strengthening demand from China," Credit Suisse said in a note.
China's National Bureau of Statistics is scheduled to
release the official manufacturing activity number on Thursday,
and if it confirms the HSBC flash data, copper may be prone to
more selling.
Highlighting weak Chinese physical demand, stocks in
Shanghai warehouses remained near levels last seen in 2002 at
the end of last week, at more than 216,000 tonnes CU-STX-SGH.
That is in contrast to LME stockpiles, which stood at
303,500 tonnes on Friday, the lowest since September 2009.
Nearby supply tightness may have been behind cash copper
surging to a premium of more than $20 versus three-month prices
MCU0-3 on Friday, its biggest in more than a year. That
premium eased to $3 on Monday.
The one bright spot is the U.S. economy, with more positive
data coming through on Friday as upward revisions of new U.S.
home sales in prior months and a drop in the supply of property
on the market added to signs of a budding housing recovery.
A separate report showed U.S. consumer confidence hitting
its highest point in a year this month despite a strong rise in
gasoline prices.
Base metals prices at 0701 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8486.00 -44.50 -0.52 11.66
SHFE CU FUT MAY2 60400 780 +1.31 9.10
HG COPPER MAR2 385.70 -0.60 -0.16 12.25
LME Alum 2319.00 -9.00 -0.39 14.80
SHFE AL FUT MAY2 16255 95 +0.59 2.59
LME Zinc 2076.00 -4.00 -0.19 12.52
SHFE ZN FUT MAY2 15950 145 +0.92 7.81
LME Nickel 20200.00 25.00 +0.12 7.96
LME Lead 2209.00 1.00 +0.05 8.55
SHFE PB FUT 16130.00 140.00 +0.88 5.53
LME Tin 24095.00 245.00 +1.03 25.49
LME/Shanghai arb^ 2165
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
