Copper falls as investors await signs of real demand

LONDON (Reuters) - Copper hit a one-week low on Monday as a rally driven by infrastructure plans in China and the promise of policy easing by the European Central Bank and U.S. Federal Reserve ran out of steam, and as the euro sank on renewed uncertainty over Spain.

The euro fell versus the dollar as investors fretted over when Spain will seek external aid, a condition for the ECB to start buying Spanish bonds. A weaker-than-expected German Ifo business climate reading also weighed on the common currency. <EUR/>

A weak euro makes dollar-priced metals more costly for European and other non-U.S. investors.

Copper also eased due to weak demand from top consumer China ahead of a week-long national holiday, with Chinese manufacturers still waiting to see orders related to Beijing's infrastructure expansion plans.

Benchmark three-month copper on the London Metal Exchange closed at $8,183 a tonne, having earlier hit its lowest in more than a week at $8,150 a tonne. It closed at $8,281.5 on Friday.

Copper, used in power and construction, hit a 4-1/2 month high last week of $8,422 a tonne.

"People are in a wait-and-see mode. I think markets don't appreciate what the impact (of central bank measures) can be. Most of these measures are unlimited in nature, they take time to flow through. We see prices pretty well supported through to the year-end," Macquarie analyst Ryan Belshaw said.

Daily LME data showed copper stocks rose 475 tonnes to 219,950 tonnes, adding to last week's 2,775 tonne increase, while Shanghai inventories jumped by 10,428 tonnes.

The global refined copper market was nevertheless facing a deepening production deficit this year.

In its latest monthly bulletin, the International Copper Study Group (ICSG) said the market had a 473,000-tonne deficit in the first half of this year.

"In the medium to long term, we believe the (copper) price has further potential. On Friday, for instance, the ICSG reported a global copper market deficit. (Also) the latest approval of infrastructure projects is likely to keep demand for metals in China at a high level," Commerzbank said in a note.

In other metals, aluminum closed at $2,080 per tonne from $2,115 and tin closed at $20,650 from $20,725.

Zinc used in galvanizing closed at $2,103 a tonne from $2,117, stainless steel ingredient nickel closed at $17,975 from $18,175, and battery material lead at $2,267 from $2,288.

Metal Prices at 1627 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 374.00 -5.45 -1.44 344.75 8.48

LME Alum 2080.25 -34.75 -1.64 2020.00 2.98

LME Cu 8186.50 -95.00 -1.15 7600.00 7.72

LME Lead 2261.50 -26.50 -1.16 2034.00 11.18

LME Nickel 17975.00 -200.00 -1.10 18650.00 -3.62

LME Tin 20601.00 -124.00 -0.60 19200.00 7.30

LME Zinc 2098.00 -19.00 -0.90 1845.00 13.71

SHFE Alu 15665.00 -75.00 -0.48 15845.00 -1.14

SHFE Cu* 59100.00 -610.00 -1.02 55360.00 6.76

SHFE Zin 15475.00 -180.00 -1.15 14795.00 4.60 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

(Reporting by Maytaal Angel; Editing by Catherine Evans)