METALS-Copper facing biggest weekly drop since early June
* Copper faces biggest weekly loss since early June
* Despite dip, aluminium set to close on strongest rally in six weeks
* Coming Up: U Michigan preliminary sentiment for July at 1355 GMT (Updates with official prices)
By Alexandra Reza
LONDON, July 18 (Reuters) - Copper remained weak on Friday as prices sank to a two-week low, depressed by concerns about the Chinese property sector and news of increased production.
In official rings, copper was down 0.6 percent at $7,025 a tonne, having touched a session low of $7,005.25, its weakest since July 2. Copper has dropped more than 1.5 percent this week, heading for its biggest weekly loss in six.
An expected surplus in the second half of this year has also driven price concerns. Evidence of plentiful supplies emerged on Friday when data showed weekly copper inventories in Shanghai warehouses rose by 28.9 percent.
This rise follows several companies increasing their guidance this week. On Wednesday Rio Tinto increased full year production guidance for copper. Anglo American Plc also reported higher copper output for the first half of the year.
The increase comes despite supply-side setbacks this year leading producers including Indonesia, Zambia and Chile.
"Given this wide range of problems on the supply side, one might have expected global copper supplies to have dropped quite sharply," Nic Brown, head of commodities research at Natixis, told the Reuters Global Base Metals Forum.
"It is testament to the strength of the new pipeline of supply that mine output in the year to date has probably risen by 4 percent or more (year on year)."
China's Huatong Road & Bridge Group said on Wednesday that it might not be able to repay a $65 million debt due next week, possibly becoming the first borrower to default in the country's largest bond market.
"We are increasingly worried about China's property market. New dwelling commencements are down 18.6 year on year in the first five months, the sharpest decline since 2009," said analyst Matt Fusarelli of AME Group.
In the United States, housing starts and building permits unexpectedly fell in June, suggesting the housing market recovery was struggling.
Aluminium traded at $1,978 a tonne in official rings, down 0.6 percent following a strong rally over five consecutive sessions this week. The metal touched a 16-month peak on Wednesday at $1,993 a tonne.
Nickel, untraded in official rings, was bid at $18,600 a tonne, down 3.1 percent. Traders were downbeat about its prospects given rising stocks and a 38 percent gain already this year.
Also untraded in official rings, lead was bid at $2,192 a tonne, up 0.1 percent.
Tin drifted down 0.1 percent from Wednesday's last bid to $22,080 a tonne. Zinc was down 0.3 percent to $2,295 a tonne.
The focus next week will be on a flash reading of China's manufacturing health, as well as U.S. inflation, new home sales and durable goods orders.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin (Additional reporting by Melanie Burton in Sydney; Editing by William Hardy and David Evans)