CORRECTED-METALS-Copper slips on weak China demand, mixed U.S. data

Thu Feb 28, 2013 12:44pm EST

(Corrects copper's closing bid price)
    * U.S. data mixed; Q4 GDP weak, jobless claims fall
    * Copper stocks rise, highest since Oct 2011
    * Aluminium hits three-month low, lead slides
    * Coming up: China Feb. PMI at 0100 GMT on Friday

    By Susan Thomas and Eric Onstad
    LONDON, Feb 28 (Reuters) - Copper lost ground on Thursday after mixed data
on the U.S. economy and because metals investors worried about scant demand from
top consumer China as well as high inventories.
    Three-months copper on the London Metal Exchange shed nearly 1
percent to an intraday low of $7,805 a tonne, but later pared losses. It failed
to trade in closing rings, but was bid at $7,815 a tonne, down 0.7 percent. It
hit its lowest since Dec. 21 at $7,785 on Tuesday.
    Prices tumbled by about $20 in a matter of minutes after data showed U.S.
gross domestic product expanded at a 0.1 percent annual rate in the fourth
quarter, the slowest since early 2011 and missing the 0.5 percent gain forecast
by analysts in a Reuters poll. 
    The move sent copper below its 200-day moving average, an indicator used by
technical analysts who look at chart patterns, which was at $7,830 on Thursday.
    Another report, however, showed a drop in new claims for U.S. unemployment
benefits last week, adding to a string of data that suggests the economy has
improved early this year.
    "It was initially a knee jerk reaction, but the fourth quarter readings are
very much water under the bridge. Also we had very good payroll numbers," said
Edward Meir at INTL FCStone. "More worrisome for copper is rising stocks."
    LME inventories of copper increased by another 2,350 tonnes on Thursday to a
total of 446,700 tonnes, the highest since October 2011. The stocks have shot up
by 40 percent this year and more than doubled since mid-October last year.   
    Aluminium hit its lowest levels in three months before also trimming its
losses. Three-month aluminium touched a session low of $1,993.85, the
weakest since Nov 28, and closed 0.5 percent lower at $2,011 a tonne.
    
    CHINA PMI DUE ON FRIDAY
    An expected surge in demand for copper from China, the world's biggest
consumer of the metal, after the Lunar New Year holiday earlier this month has
so far failed to materialize. 
    "For base metals to push significantly higher it has to come from China,"
said Natixis analyst Nic Brown.
    Some analysts are saying investors should be patient, and that trade should
pick up towards the end of next week or later in March.
    "Chinese workers only started to come back last week, so it's probably too
early to argue that we'll see any change in the physical market, which is dead,"
said Macquarie Bank analyst Bonnie Liu in Singapore.
    Investors will closely eye data on Chinese factory activity due on Friday
for more clues. The median forecast from a Reuters poll of 14 economists showed
China's official purchasing managers' index (PMI) probably edged lower to 50.2
in February after seasonal adjustments, from January's 50.4. 
    In a further dampener on copper, Chile's output rose almost 9 percent in
January compared with the same month last year, on higher ore grades and
improved productive capacity at some deposits. 
    But copper could get a boost from tensions between the Mongolian authorities
and Rio Tinto over the $6.2 billion Oyu Tolgoi copper and gold project
the miner controls.
    Mongolia has cancelled a gold mining licence indirectly linked to the
project. The cancellation followed a string of complaints by the government over
Oyu Tolgoi. 
    The weaker trend also pulled down the other base metals.
    Lead was the biggest loser, falling 1.0 percent to close at $2,281 a
tonne, and zinc fell 0.5 percent to $2,065 after touching the weakest
levels since Jan. 24.
    Tin ended 0.3 percent lower at $23,400 a tonne and nickel 
lost 0.6 percent to $16,605. 
    
 Metal Prices at 1716 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2012   Ytd Pct
                                                              move
  COMEX Cu       354.10       -1.65     -0.46     365.25     -3.05
  LME Alum      2007.00      -15.50     -0.77    2073.00     -3.18
  LME Cu        7817.25      -52.75     -0.67    7931.00     -1.43
  LME Lead      2283.00      -21.00     -0.91    2330.00     -2.02
  LME Nickel   16625.00      -75.00     -0.45   17060.00     -2.55
  LME Tin      23412.00      -63.00     -0.27   23400.00      0.05
  LME Zinc      2067.50      -30.50     -1.45    2080.00     -0.60
  SHFE Alu     14795.00      -55.00     -0.37   15435.00     -4.15
  SHFE Cu*     57630.00       60.00     +0.10   57690.00     -0.10
  SHFE Zin     15655.00      -15.00     -0.10   15625.00      0.19
 ** 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 Melanie Burton in Singapore; editing by Anthony
Barker)
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