METALS-Copper falls on firmer dollar, China GDP data eyed

Fri Jul 12, 2013 12:14pm EDT

* Market waiting for China GDP data on Monday

* Dollar firms after sell-off on Thursday

* Copper supply disruptions diminish

By Susan Thomas and Harpreet Bhal

LONDON, July 12 (Reuters) - Copper fell on Friday as the dollar firmed and as traders cut risk ahead of Chinese data next week, but the metal remained on track for the biggest weekly gain in two months after the United States signalled it would keep monetary policy loose.

A rally this week in financial markets spread across stocks and bonds to oil and metals, driven by hints from the Federal Reserve that it may not be as eager to phase out support as markets had started to believe.

But while shares continued to rise on Friday, caution set in on the metals markets as concerns about demand for commodities in top consumer China resurfaced after dismal trade numbers this week and ahead of gross domestic product (GDP) data on Monday.

Three-month copper on the London Metal Exchange ended at $6,954 a tonne, down from a close of $7,000 on Thursday.

Copper hit the highest since June 18 on Thursday at $7,049.25 a tonne and is on course to close the week up around 2 percent, the biggest weekly gain in more than two months.

"The Fed got their message across that tapering isn't imminent. That was yesterday's story," BNP Paribas analyst Stephen Briggs said.

"The focus now returns to China. Clearly the market's view is that the slowdown in China is quite a substantial one, and China is more important for metals demand than is the U.S. and Europe," he said.

China accounts for 40 percent of global copper consumption.

As for Beijing's second-quarter GDP figures, economists polled by Reuters see growth at a median 7.5 percent.

China's finance minister signalled that Beijing may be willing to tolerate economic growth in the second half of the year significantly below 7 percent, the most sobering comment to date from a senior policymaker on its slowdown.

"Their (metals price) resilience will be tested at the beginning of next week when key Chinese economic indicators such as the gross domestic product, fixed assets investments and industrial production figures are published," Commerzbank analysts said in a note.

"Our analysts anticipate disappointing second-quarter growth figures, which could weigh on prices in the short term."

The dollar rose against a basket of currencies on Friday, making dollar-priced copper more expensive for holders of other currencies.

In addition, supply disruptions that have underpinned the copper price in recent months are diminishing.

Copper concentrate shipments from Mongolia's Oyu Tolgoi mine began on Tuesday after repeated delays. At full tilt it will produce some 450,000 tonnes a year.

Earlier in the week Freeport-McMoRan Copper and Gold Inc. resumed copper shipments from Grasberg in Indonesia, the world's second-biggest copper mine, as it restarted open-pit and underground mining.

In other metals, zinc ended at $1,903 from $1,900 on Thursday.

Aluminium, untraded at the close, was bid at $1,843, compared with $1,835 at the close on Thursday. Tin, also untraded at the close, was bid at $19,500 from $19,450.

Lead, untraded at the close, was bid at $2,071 from $2,080, and nickel, also untraded at the close, was bid at $13,750 from $13,635.

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