METALS-Copper falls on dollar strength, China growth worries

Mon Jul 15, 2013 12:10pm EDT

* China's GDP slows to 7.5 pct in Q2, matches forecasts

* Dollar rises vs euro and basket of currencies

* U.S. retail sales rise by less-than-expected pace in June

By Susan Thomas and Harpreet Bhal

LONDON, July 15 (Reuters) - Copper fell on Monday, pressured by a strong dollar and concerns about the outlook for metals demand after data showed China's growth slowed in the second quarter.

Three-month copper on the London Metal Exchange ended at $6,920 a tonne, down from Friday's close of $6,954.

China's economic growth slowed to 7.5 percent in the second quarter, from 7.7 percent in the first quarter, although the figures were in line with expectations, helping to limit copper's losses.

Also putting pressure on metals was a rise in the dollar against the euro and a basket of currencies. A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies.

"The dollar is firming, and that seems to be applying a bit of pressure on metals. There are also ongoing concerns about growth in China," Societe Generale analyst Robin Bhar said.

"Clearly China is slowing, and not just short term. Certainly we believe, longer term, it will slow more towards the 6 percent level within the next three to four years."

Many commodities are especially sensitive to growth in China. The country accounts for about 40 percent of global consumption of copper, which is used extensively in construction and power cables.

"The Chinese economy did grow more slowly for the second consecutive quarter, which appears consistent with the new government policy of placing greater emphasis on sustainability and tolerating less economic dynamism," Commerzbank analysts said in a note.

The dollar trimmed its gains after data showing U.S. retail sales rose less than expected in June, which dented expectations of a reduction in stimulus by the U.S. Federal Reserve this year.

The flood of easy money created by the Fed since the 2008-2009 financial crisis has been a drag on the U.S. dollar in recent years, and integral to gains in commodity prices.

In industry news, India's top copper smelter can stay open, but should take extra steps to prevent pollution, an environmental court said, ensuring that over half of the country's output of the metal stays on stream.

Hedge funds and money managers trimmed net short positions in copper last week, a report by the Commodity Futures Trading Commission showed.

In other metals, nickel closed at $13,505 from a last bid of $13,750 on Friday, tin ended at $19,390 from a last bid of $19,500 and lead closed at $2,055 from a last bid of $2,071 on Friday.

Zinc closed at $1,892 from $1,903 on Friday, while aluminium ended at $1,804 from a last bid of $1,843.

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