METALS-Copper falls, waiting for stimulus measures

* Drop comes after hitting 7-week top on Tuesday
* Trading cautious ahead of Thursday's ECB meeting
* LME copper may fall to $7,701-technicals

(Adds comment, updates prices)
By Carrie Ho
SHANGHAI, July 4 (Reuters) - London copper edged down on
Wednesday as investors locked in recent steep gains and awaited
for more signals from central banks that they will act to revive
a faltering global economy that has dented demand for industrial
metals.
Copper hit a seven-week high on Tuesday, fuelled by hopes
shaky economies from Europe to China will force central banks to
launch more stimulus measures. Investors are hoping the European
Central Bank will start by cutting interest rates at its
Thursday meeting.
The ECB is seen reducing rates to a record low, but may need
to do more to satisfy financial markets already starting to
wonder about the solidity of financial measures intended to
prevent the euro zone from unravelling which European leaders
decided on during a meeting last week.
Three-month copper on the London Metal Exchange fell
1.2 percent to $7,725 per tonne by 0751 GMT. It rose as high as
$7,823 on Tuesday, its loftiest since May 15.
The most-active October copper contract on the Shanghai
Futures Exchange eased 0.2 percent to close at 55,970
yuan ($8,800) per tonne, also after touching a seven-week high
in the previous session.
"It's a natural technical correction after the markets have
fully expressed their optimism over the latest European measures
and stimulus expectations. Now we need details of a solid euro
zone rescue plan to sustain this euphoria," said a
Shanghai-based trader with an international firm.
London copper surged 4 percent on Friday in a broad-based
rally that gave commodities their biggest one-day gain since
March 2009 after European leaders agreed to allow their rescue
fund to inject aid directly into banks from next year, and moved
to stabilise bond markets.
Prices retreated on Monday before rising again on Tuesday as
investors held out hopes for stimulus measures to rescue the
world economy after another set of data earlier this week
pointed to a deterioration in factory activity.
Sluggish demand from top copper consumer China has also been
weighing on prices of the metal, with hefty copper stockpiles
crimping imports.
Technical charts suggest LME copper may fall further to
$7,701 and Shanghai copper to 55,620 yuan, according to Reuters
market analyst Wang Tao.
LME lead was the biggest loser of the day, falling
2.5 percent at one point to a session low of $1,889.75, snapping
a four-session rise which saw it more than 10 percent.
"Investors are exiting their positions today," said a
Shanghai-based trader.
Investors are now waiting for key U.S. payrolls data due out
on Friday for fresh trading cues, with a disappointing number
likely to strengthen hopes for another round of monetary easing
by the U.S. Federal Reserve.

Base metals prices at 0751 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7725.00 -93.00 -1.19 1.64
SHFE CU FUT OCT2 55970 -130 -0.23 0.61
LME Alum 1965.50 -17.50 -0.88 -2.70
SHFE AL FUT OCT2 15645 145 +0.94 -1.23
HG COPPER SEP2 351.15 -2.85 -0.81 2.20
LME Zinc 1882.50 -23.50 -1.23 2.03
SHFE ZN FUT OCT2 14830 -20 -0.13 0.24
LME Nickel 17145.00 -145.00 -0.84 -8.36
LME Lead 1905.00 -34.00 -1.75 -6.39
SHFE PB FUT 14950 -20 -0.13 -2.22
LME Tin 19100.00 -150.00 -0.78 -0.52
LME/Shanghai arb 1388

Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
($1 = 6.3523 Chinese yuan)

(Reporting by Carrie Ho; Editing by Manolo Serapio Jr. and
Miral Fahmy)