METALS-Copper rises on tight supply, Asia weakness limits gains
* Freeport declares force majeure on Grasberg's copper
* Tight supply offsets deepening slowdown in Asia economies
* Trading thin due to holiday in China
By Susan Thomas and Silvia Antonioli
LONDON, June 12 (Reuters) - Copper rose off its lowest level in almost six weeks on Wednesday as concerns over supply tightness increased after the owner of the world's second-largest mine declared force majeure on copper deliveries.
Keeping gains in check though, was a deepening economic slowdown in big metals-consuming nations in Asia.
Freeport-McMoRan Copper & Gold Inc declared force majeure on deliveries of copper concentrate from its Grasberg mine in Indonesia, where work has been suspended after a May accident that killed 28 people.
Freeport said the production halt has curbed output by some 80 million pounds of copper, and it is not clear when Grasberg will be reopened.
"The fact that they declared force majeure today suggests the closure might be rather more extended that we originally thought," Standard Chartered analyst Daniel Smith said.
"I guess we don't know how long it is going to be. That's the kind of danger for anybody that is bearish on copper."
Three-month copper on the London Metal Exchange closed at $7,120 per tonne, up almost 1 percent from $7,065 at the close on Tuesday. It is still down around 10 percent so far this year.
Weighing on metals prices, export growth throughout Asia has sagged in recent months on slackening demand from the United States, Europe and China, while leading indicators are also pointing to weaker factory activity in the coming months.
Heavy stock market and currency falls in Southeast Asia this week have underlined the risks as investors grow nervous that the U.S. Federal Reserve may taper its quantitative easing policy that has fuelled a surge of credit.
Those fears sparked selling of stocks, bonds and commodities on Tuesday. Some of those losses were recouped on Wednesday.
"Copper is caught between the clear tightening in the supply fundamentals and the significant deterioration in sentiment across the developing world," Natixis analyst Nic Brown said.
Trading volumes were low, with China's markets closed for a public holiday this week until Thursday, when investors there will have their first chance to react to the export figures that were released over the weekend.
"There will certainly be a reaction. In quite what direction remains to be seen," Brown said. "It's entirely possible that the Chinese will come in, see copper back at around $7,100 or lower, and say 'we want some of that'."
In other metals, benchmark aluminium closed at $1,864 from a last bid at $1,887 on Tuesday, tin finished at $20,400 per tonne from $20,525 and zinc at $1,865 from $1,852.
Battery material lead closed at $2,118 from $2,117, nickel $14,275 from $14,535.