METALS-Copper slips, metals tread water ahead of EU summit

* Investors await developments from EU summit
* Copper slightly lower, aluminium edges higher
* Stronger dollar weighs on markets

By Eric Onstad
LONDON, June 28 (Reuters) - Copper edged lower on Thursday
after three days of gains, as investors doubted that a European
Union summit would succeed in tackling the region's debt crisis
and as the dollar rose.
Investors were wary of taking big positions as EU leaders
were due to kick off a summit where Germany was expected to
continue to refuse to back other countries' debts.

Expectations were very low for a breakthrough at the EU
summit, so a reasonable compromise might allow markets to move
higher, said analyst Michael Widmer at Bank of America/Merrill
Lynch in London.
"If it is a credible solution with a clear long term path,
the markets may not necessarily trade lower. They would go lower
if you get something that is half-baked."
Benchmark three month copper at the London Metal
Exchange fell 0.4 percent to $7,375.75 a tonne by 1000 GMT after
earlier rising as high as $7,449.50, but other metals such as
aluminium were slightly firmer, still feeling the glow of
stronger than expected U.S. economic data on Wednesday.
"The markets are extremely short right now so it doesn't
take a lot for prices to rally. Aluminium is at a record short
position," Widmer said.
A slightly firmer dollar, which makes dollar-denominated
commodities more costly for holders of other currencies, weighed
on copper and pared gains in other metals.
Copper has slid about 13 percent so far this quarter and is
down 4 percent this year, but the market has moved into
backwardation, where nearby prices are higher than forward ones,
indicating some tightness.
Cash copper was at a premium to three months CMCU0-3 of up
to $21 on Wednesday compared to a discount of $10 early last
week.

COPPER DRAWDOWNS IN CHINA
In China, the most-active October copper contract on the
Shanghai Futures Exchange gained 0.9 percent to close
at 54,200 yuan ($8,500) per tonne.
Copper is trapped in narrow ranges due to longer-term worry
about the global economy and with demand from top consumer China
still largely sluggish, said a Shanghai-based trader.
Copper faces resistance at around $7,500 and will see
support at $7,250 to $7,300, the trader said.
But market players said they were seeing more copper
drawdowns from Chinese bonded warehouses due to cheaper prices
and an improved LME-Shanghai arbitrage, with LME three-month
copper trading at a premium of 369 yuan on Thursday, well below
the nearly 4,000 yuan in early May.
In London, three month aluminium rose 0.24 percent
to $1,876.5 a tonne, after Shanghai aluminium futures
rebounded 2 percent.
The gains in China came after losses in previous days were
regarded as overdone in reaction to news that China's top
aluminium-producing province cut the electricity fees of
smelters in a bid to revive output.
In Australia, Rio Tinto said its Bell Bay aluminium smelter
reached a new power supply deal to secure its long-term future.

Galvanising metal zinc jumped 1.9 percent to $1,790
a tonne after LME data MZNSTX-TOTAL showed 113,925 tonnes of
net inventory cancellations. LME zinc stocks have surged 21
percent this year to 995,425 tonnes.
Tin fell 0.43 percent to $18,620 a tonne while
battery material lead gained 0.92 percent to $1,776.25
a n d n i ckel added 0.7 percent to $16,371.

Metal Prices at 1000 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 333.20 -2.30 -0.69 344.75 -3.35
LME Alum 1875.00 3.00 +0.16 2020.00 -7.18
LME Cu 7373.75 -31.25 -0.42 7600.00 -2.98
LME Lead 1774.25 14.25 +0.81 2034.00 -12.77
LME Nickel 16350.00 100.00 +0.62 18650.00 -12.33
LME Tin 18600.00 -100.00 -0.53 19200.00 -3.13
LME Zinc 1788.25 32.25 +1.84 1845.00 -3.08
SHFE Alu 15375.00 285.00 +1.89 15845.00 -2.97
SHFE Cu* 54470.00 460.00 +0.85 55360.00 -1.61
SHFE Zin 14330.00 110.00 +0.77 14795.00 -3.14
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07

(Additional reporting by Carrie Ho in Shanghai; editing by
Keiron Henderson)