RTRS:METALS-Copper climbs on hopes for China growth, ECB action
* China promises further support for economy
* LME copper set to close the month down 1 pct
* China official PMI on Wednesday could help set direction
* Coming Up: U.S. Chicago PMI for July; 1345 GMT
(Adds quotes, updates prices)
By Eric Onstad and Melanie Burton
LONDON/SINGAPORE, July 31 (Reuters) - Copper rose on Tuesday as investors
pinned hopes on fresh easing measures in Europe and after Chinese officials
promised further support for the economy ahead of key factory figures in the
world's biggest metals consumer.
The expectation that the European Central Bank would announce new steps on
Thursday to shore up the fragile economy was twined with caution that markets
may be disappointed yet again after previous rallies were deflated when no
action was taken.
Three-month copper on the London Metal Exchange gained 0.85 percent
at $7,613 a tonne by 1020 GMT, after falling 0.25 percent on Monday.
Copper prices have recovered by 3.5 percent from last week's one-month lows
but still remain in negative territory for the month with a loss of 1 percent.
Markets have been trapped in a range of $7,400 to $7,800 in July.
"Markets are stuck in a 'wait and see' mode ahead of the ECB meeting on
Thursday. (ECB head Mario) Draghi has raised expectations significantly and will
be expected to deliver on his words, else suffer a material blow to his
credibility," said Guy Wolf, macro strategist at broker Marex Spectron in
London.
"The consensus is that this is a binary event - if Draghi delivers, we can
expect the recent rally to continue. If not, we will be straight back into the
teeth of the European crisis."
Copper got a filip after the Chinese premier was quoted as saying the
country will step up policy fine-tuning in the second half to support economic
growth.
China's official manufacturing sector index for July, to be released on
Wednesday, will be scoured for more evidence that loosening steps taken by
Beijing in the past few months have filtered down to the real economy, helping
stimulate growth and metals demand.
"Copper remains macro-driven and data point dependent, but the likelihood of
any strong conviction trend emerging through the summer months seems pretty
limited considering physical markets are all but dead," said Hong Kong-based
commodities analyst James Luke of China International Capital Corporation.
The most-traded November copper contract on the Shanghai Futures Exchange
rose 0.40 percent to close at 55,050 yuan ($8,600)a tonne.
China is the world's biggest market for refined copper, accounting for 40
percent of refined demand last year, but there is scant buying interest from
consumers, traders said.
"Physical demand is weak, traders tend to sell when prices are above
$7,600," a Hong Kong-based trader said.
LEAD OUTLOOK
On Monday, lead hit its highest since June 7 but further gains have been
capped by trade selling, with signs pointing to softer demand from the North
American battery market in particular, traders and analysts said.
North American shipments of replacement automotive batteries in June fell
5.94 percent from May and dropped 7.72 percent from June 2011, a U.S. industry
group said on Monday.
"Lead put in another strong performance up to $1,952 as technical buying
through $1,930 emerged but trade selling was seen as the market rose," trading
house Sucden said in a research note.
Three month lead on the LME, which touched a high of $1,952.75 on
Monday, added 0.2 percent to $1,955 a tonne.
Aluminium gained 0.5 percent to $1,909.75 a tonne and stainless
steel component nickel fell 0.6 percent to $16,156 after breaking above
the $16,000 level on Monday.
Zinc, used in galvanising, added 0.4 percent to $1,869.25 a tonne
and tin rose 0.2 percent to $18,305 a tonne.
Metal Prices at 1020 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2011 Ytd Pct
move
COMEX Cu 345.40 3.80 +1.11 344.75 0.19
LME Alum 1908.50 8.50 +0.45 2020.00 -5.52
LME Cu 7613.25 64.25 +0.85 7600.00 0.17
LME Lead 1955.00 4.00 +0.21 2034.00 -3.88
LME Nickel 16151.00 -99.00 -0.61 18650.00 -13.40
LME Tin 18301.00 31.00 +0.17 19200.00 -4.68
LME Zinc 1868.75 6.25 +0.34 1845.00 1.29
SHFE Alu 15485.00 40.00 +0.26 15845.00 -2.27
SHFE Cu* 55180.00 180.00 +0.33 55360.00 -0.33
SHFE Zin 14710.00 90.00 +0.62 14795.00 -0.57
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
