METALS-Copper slips after 4-day rise, economic woes drag

Wed Oct 3, 2012 3:33am EDT

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(Adds detail, updates prices)
    * LME copper curve flattens as nearby demand slips CMCU0-3
    * China on holiday this week; ShFE closed
    * Coming up: euro zone Markit Services PMI at
0758 GMT

    By Melanie Burton
    SINGAPORE, Oct 3 (Reuters) - Copper fell on Wednesday after
climbing for four days, as a fragile global economy and Europe's
lingering debt crisis curbed buying interest, with a week-long
public holiday in top copper consumer China keeping trading
volumes extremely thin.    
    Prices have been caught in a tug of war between liquidity
bulls who view central bank easing as a reason to buy hard
assets and investors who are bearish on fundamentals, seeing a
structural shift in China's demand for metals taking the heat
out of commodity price gains.
    "On one hand you have the more positive vibe from U.S.
players with people encouraged by policy action there. But data
from China is still showing the economy is bottoming -- not yet
improving -- and you still have this political paralysis going
on ahead of the leadership transition in China," said ANZ
commodity strategist Nick Trevethan.
    "We typically will see demand pick up in December. The
question is, will it is pick up as significantly as in the past?
I don't think so."
    Three-month copper on the London Metal Exchange had
eased 0.85 percent to $8,255.00 a tonne by 0715 GMT, after
climbing more than 2 percent over the past four sessions.
    Despite recent gains, copper has been trapped in a narrow
range in lean volumes with China away since Monday. The volume
of copper traded on LME Select stands at less than 2,500 lots so
far.
    The industrial metal hit a 4-1/2 month peak of $8,422 on
Sept. 19, powered by stimulus measures from central banks to
bolster a flagging global economy. 
    Still, Standard Chartered said it sees prices targeting
all-time market highs of $10,190 a tonne in the next 12 months.
    "While downside risks are high, we believe that the
fundamental outlook has improved owing to central bank action
and we expect prices to trend higher in the year ahead as better
fundamentals slowly feed through," it said in a research note.
     "We have upgraded our Q4 copper price forecast to $8,500 a
tonne from $8,000/t previously. We recommend that consumers
accumulate copper on dips towards $8,000/t as we expect any
weakness to be short-lived. Prices are likely to target $8,875
in the months ahead."

    FOCUS ON THE U.S.
    Further signs of slowing expansion in China, which accounted
for 40 percent of refined copper demand last year, came on
Wednesday, with the country's official purchasing managers'
index for the services sector falling to 53.7 in September from
56.3 in August.  
    Reflecting a lack of nearby interest in copper, the LME
forward curve has flattened with cash copper trading at a small
discount to three-month prices on Tuesday from a $6.50 premium
at the end of September. CMCU0-3
    The United States will be in focus this week with nonfarm
payrolls data for September due on Friday after U.S. autosector
sales posted their best showing in 4-1/2 years. 
    The Federal Reserve in September began a bid to buy $40
billion in mortgage-backed securities every month until the jobs
outlook improved substantially and Friday's numbers will be the
initial test of whether that is paying off.
    U.S. employers are expected to have added 113,000 jobs to
their payrolls last month, an increase from 96,000 in August.
 
   
                                                                          
  Base metals prices at 0715 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            8255.00    -70.50     -0.85      8.62
  SHFE CU FUT JAN3     --         --        --        --
  HG COPPER DEC2     376.35     -3.75     -0.99      9.53
  LME Alum          2090.25    -16.75     -0.79      3.48
  SHFE AL FUT JAN3     --         --        --        --
  LME Zinc          2077.25    -20.75     -0.99     12.59
  SHFE ZN FUT JAN3     --         --        --        --
  LME Nickel       18472.00     22.00     +0.12     -1.27
  LME Lead          2278.00    -22.00     -0.96     11.94
  SHFE PB FUT          --         --        --        --
  LME Tin          22000.00   -295.00     -1.32     14.58
  LME/Shanghai arb^     923
 
   Shanghai and COMEX contracts show most active months
 
    

 (Additional reporting by Manolo Serapio Jr.; Editing by Joseph
Radford and Ed Davies)
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