METALS-Copper ends down, cuts losses on possible ECB move

* Copper posts third consecutive weekly gain
* Copper open interest lowest in 5-1/2 years
* Tin rises to 3-month high on supply concerns
* Coming up: China official manufacturing PMI Saturday

By Chris Kelly and Harpreet Bhal
NEW YORK/LONDON, Aug 24 (Reuters) - Copper fell on Friday, largely tracking
a volatile euro versus the dollar, but cut its losses later in the day on hopes
that European policymakers were perhaps gaining an upper hand in containing the
region's long-standing debt problem.
Copper trimmed its early losses and managed to close in the upper half of
the day's trading range after Reuters reported the European Central Bank (ECB)
is considering setting yield band targets under a new bond-buying program.
"I think that gave us a little bit of a lift ... some ideas about Europe
being a little bit better," said Sterling Smith, commodity strategist at
Citibank's Institutional Client Group in Chicago.
Sentiment also improved after U.S. Federal Reserve Chairman Ben Bernanke
said in a letter to a congressional oversight panel that the Fed has room to
deliver additional monetary stimulus to boost the U.S. economy.
COMEX copper for September delivery fell 0.90 cent to settle at
$3.4835 per lb, dealing between $3.4560 and $3.4945. Despite the late-week loss,
copper prices posted their third straight weekly gain.
COMEX volumes picked up Friday to stand at 61,700 lots in late New York
trade, nearly 40 percent above the 30-day average, according to preliminary
Thomson Reuters data.
On the London Metal Exchange (LME), three-month copper fell $44.50
to end at $7,640 a tonne, backing away from the previous session's one-month
high of $7,720.50.
Fed officials gave mixed messages on Thursday. With one playing down the
odds of imminent bond buying and another seeing a lot of reasons for more
easing, investors scaled back their expectations for economic stimulus.

"After the initial thoughts from the Fed statement yesterday, we saw some
short-covering (in metals markets) and that has run its course now," Gayle
Berry, an analyst at Barclays Capital, said.
"We're not at the point yet where the market's views have changed to add
fresh longs as there are still negative headlines out there."
U.S. data on Friday also sent mixed messages. New orders for long-lasting
U.S. manufactured goods surged in July, but a second straight month of declines
in a gauge of planned business spending pointed to a slowing growth trend in the
factory sector.
Trading volume was light due to summer holidays in the northern hemisphere,
when many plants shut for annual maintenance.
Reflecting a lack of conviction about copper's short-term price direction,
the open interest in the LME copper contract dropped to a 5-1/2 year low .
"It'll take a lot of conviction to get fresh longs to come in at this point,
so we will be facing pressure from the shorts today," said an analyst with an
international trading firm who declined to be identified as he was not
authorized to speak to the media.
Concerns about the euro zone debt crisis still has kept sentiment cautious
following news that Spain was in talks with euro zone partners over sovereign
aid, although it has not made a final request for a bailout.

TIN RALLY
Benchmark tin jumped $950, or close to 5 percent, to end at its
highest since mid-May at $20,900 a tonne on concerns about a supply shortfall
from Indonesian producers.
A stoppage by tin miners in Indonesia because of weak global prices has
increased to encompass over 90 percent of smelters, leading shipments to decline
by more than half from the world's top exporter of the metal.
Looking further ahead to the outlook for the red metal, investors are keen
to see signs of further stimulus action from China to help spur a pickup in
demand in the country that consumes around 40 percent of global refined copper.
Inventory data showed copper inventories in warehouses monitored by the
Shanghai Futures Exchange rose 1.8 percent from last Friday.
Although the manufacturing sector in the world's second-largest economy
contracted at its sharpest pace in nine months in August, market watchers are
ruling out a previously expected cut in banks' required reserve ratio after the
Chinese central bank injected a seven-month high amount of funds into the
financial system.

Metal Prices at 1759 GMT

Metal Last Change Pct Move End 2011 Ytd Pct
move
COMEX Cu 348.45 -0.80 -0.23 343.60 1.41
LME Alum 1917.00 12.50 +0.66 2020.00 -5.10
LME Cu 7639.00 -45.50 -0.59 7600.00 0.51
LME Lead 1970.00 18.00 +0.92 2035.00 -3.19
LME Nickel 16470.00 -5.00 -0.03 18710.00 -11.97
LME Tin 20895.00 945.00 +4.74 19200.00 8.83
LME Zinc 1879.00 17.00 +0.91 1845.00 1.84
SHFE Alu 15355.00 -5.00 -0.03 15845.00 -3.09
SHFE Cu* 55740.00 -360.00 -0.64 55360.00 0.69
SHFE Zin 14635.00 -15.00 -0.10 14795.00 -1.08
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07