* China central bank says will guide rates to reasonable
* Copper may crash in 3 months-technicals
* U.S. new home sales rise to highest in nearly five years
By Maytaal Angel
LONDON, June 25 Copper rose on Tuesday,
recovering from a three-year low, after China's central bank
sought to soothe fears that a credit crunch would crimp growth
in the world's top metals consumer.
China's central bank said earlier it would guide market
rates to reasonable levels, and it expected that seasonal
factors that caused a recent spike in interbank market rates
would gradually fade.
China accounts for around 40 percent of global refined
Data showing sales of new U.S. single-family homes rose to
their highest in nearly five years in May also helped lift
copper. The metal is used widely in the construction industry.
Benchmark three-month copper on the London Metal Exchange
closed at $6,805 a tonne on Tuesday, off an intra-day
low of $6,602, its weakest level since July 2010. It closed at
$6,670 on Monday.
"China's central bank, having given a jolt of reality to the
shadow banking sector, is making soothing noises today. (And) in
the case of China, what the authorities say tends to result in
action," BNP Paribas analyst Stephen Briggs said.
But he added: "On a six-to-12-month view, we're going to see
lower numbers. Copper has moved from years of deficit to an
extended period of surplus, and the price even now is more above
cost of production than for other base metals."
Copper hit a three-year low on Monday on worries that
China's central bank was engineering a tightening of cash in a
bid to rein in excessive credit growth and on fears about a
scaling down of U.S. monetary stimulus.
Copper, a key indicator of industrial demand, has fallen
about 15 percent this year.
A slew of banks cut their 2013 copper price forecasts on
Tuesday. Credit Suisse cut its average price forecast to $7,240
a tonne from $7,482, Deutsche Bank cut its forecast by 4 percent
to $7,547 a tonne, while Goldman Sachs cut its forecast to
$7,216 a tonne from $7,600 previously.
Copper also took a hit earlier on news that open-pit
production at Freeport McMoRan Copper and Gold's
Indonesian unit, the world's second-largest copper mine, has
recovered to about 60 percent of capacity.
Freeport announced on Monday that it was ramping up output
at Grasberg, six weeks after a deadly tunnel collapse at the
mine. The resumption of output came much earlier than traders
and analysts had expected.
Nickel closed at $13,930 a tonne, having earlier hit
$13,525 a tonne, its lowest point since May 2009. It closed at
$13,630 on Monday.
Tin closed at $19,875 a tonne from $19,575,
aluminium at $1,784 from $1,771, zinc at
$1,848.50 from $1,825 and lead at $2,055 from $1,995.