* 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 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
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.