METALS-Copper ends lower, inventories hit demand outlook
* Macro data improving but inventory levels worry
* Strikes lend support to cap copper losses
* U.S. weekly jobless claims fall more than expected (Changes headline, adds NEW YORK to dateline, recasts, updates with New York copper prices, adds analyst comments)
By Chris Kelly and Maytaal Angel
NEW YORK/LONDON, Nov 12 (Reuters) - Copper prices ended lower on Thursday, weighed down by a slight rebound in the U.S. dollar and growing concerns about demand weakness after London stockpile levels broke above 400,000 tonnes.
Nickel MNI3 inventories on the London Metal Exchange (LME) rose above 131,700 tonnes, the highest since early 1995, driving prices of the metal down more than 5 percent to their lowest since late July.
Copper for December delivery HGZ9 on the New York Mercantile Exchange's COMEX division shed 1.85 cents to end at $2.9475 a lb, near the lower end of its $2.93 to $3.0010 session range.
LME copper for three-month delivery MCU3 finished down $37 at $6,503 a tonne from $6,540 at the close on Wednesday and compared with a session low at $6,468.
John Gross, publisher of the Copper Journal, said that despite the bearish fundamental backdrop in the copper market, prices remained locked in a higher trend.
"Forget about the fundamentals ... the price trend has been up and a trend is going to remain in place until something occurs to change it. The rising inventories has not changed it and the weakness in demand has not changed it," he said.
LME copper stocks climbed 4,800 tonnes to total 402,125 -- the highest since late April, indicating demand has yet to recover outside China.
"This build in inventory illustrates the fact that the physical market is looking a lot less supportive on the demand side," said Daniel Brebner, metals analyst at Deutsche Bank.
Those demand concerns were echoed by the chief executive of the world's second-biggest copper producer, Freeport McMoRan Copper and Gold (FCX.N). [ID:nLC478998]
Copper's downside push was limited by better-than-forecast jobless data from the United States, the world's largest economy, which also gave a boost to the dollar. [USD/]
The U.S. Labor Department reported that initial state jobless benefit claims fell to 502,000 in the latest week. The consensus forecast was for initial claims of 510,000. [ID:nN11377609] [ID:nOAT004353].
"The whole LME complex reacts to macro news and equity markets, optimism is still there, the dollar is relatively weak despite today's rebound ... but the upside is capped by fundamentals," said Andrey Kryuchenkov, analyst at VTB Capital.
On Wednesday, copper, used in power and construction, rose on data showing factory output growth surged in China, the world's largest metals consumer. [ID:nPEK212006]
But the metal also had to contend on Wednesday with data showing China's imports of unwrought and semi-finished copper products were down 34 percent in October from September. [ID:nSP438867]
WAGE STRIKE
A strike over wages by workers at Konkola Copper Mines (KCM), a unit of London-listed Vedanta Resources (VED.L), halted most units at the facility in Zambia. [ID:nLB669456]
Investors are taking increasing note of industrial disputes at mines, which could support prices and give indicators for future labor talks.
"It's one of many," said Marc Elliott, an analyst at investment bank Fairfax on Konkola. "Negotiations in South American miners are under way ... it is all lending some support to prices at the moment."
Adding to positive sentiment on Thursday was rising euro zone industrial output data. [ID:nLC146020]
In other metals traded, aluminum MAL3 ended at $1,948 a tonne from $1,964. LME stocks in the metal, used in transport and packaging, fell 3,150 tonnes to 4.53 million tonnes to continue a recent trend downwards.
Steel-making ingredient nickel MNI3 ended at $16,190 from $16,850, having hit $15,975 earlier, its lowest since July 22, as swelling stockpiles knocked sentiment and raised demand concerns.
Battery material lead MPB3 ended at $2,260 from $2,304.50, zinc MZN3 ended at $2,150 from $2,184 and tin MSN3 was last bid at $14,650, its lowest in just over a week. It closed Wednesday at $14,725.
Metal Prices at 2010 GMT Metal Last Change Pct Move End 2008 Ytd Pct
move COMEX Cu 294.35 -1.80 -0.61 139.50 111.00 LME Alum 1948.00 -12.00 -0.61 1535.00 26.91 LME Cu 6497.00 -43.00 -0.66 3060.00 112.32 LME Lead 2251.00 -53.50 -2.32 999.00 125.33 LME Nickel 16220.00 -630.00 -3.74 11700.00 38.63 LME Tin 14675.00 -50.00 -0.34 10700.00 37.15 LME Zinc 2152.00 -32.00 -1.47 1208.00 78.15 SHFE Alu 15150.00 35.00 +0.23 11540.00 31.28 SHFE Cu* 51040.00 270.00 +0.53 23840.00 114.09 SHFE Zin 16950.00 225.00 +1.35 10120.00 67.49 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Michael Taylor in London; editing by Keiron Henderson and Jim Marshall)
