* Dollar gains versus euro after ECB's Draghi speaks
* Copper backwardation eases from 1 year high
* U.S. markets closed for Independence Day holiday
By Maytaal Angel and Silvia Antonioli
LONDON, July 4 Copper slipped on Thursday from
the previous session's two-week highs, under pressure from a
stronger dollar and easing concerns over supply tightness.
The euro fell to a five-week low against the dollar after
the European Central Bank chief flagged downside risks to euro
zone growth prospects.
A strong dollar makes dollar-priced metals more costly for
Three-month copper futures on the London Metal Exchange
closed down 0.6 percent at $6,950 a tonne, reversing
gains of 1.1 percent the previous session.
Copper prices have rebounded around five percent from
three-year lows touched last week as mine shutdowns combined
with limited delivery from exchange-registered warehouses to
choke immediate supply.
Chinese buyers rushed to secure stock, sending premiums to
record levels and sparking talk of increased Chinese copper
But concerns over supply tightness have now eased a little
and a slew of weak economic data from China, the world's top
copper consumer, is also weighing on sentiment.
"The stronger dollar clearly is a factor in today's fall but
I also think some of the tightness is beginning to wane and
therefore prices are maybe not receiving as much support as they
have in the last week or so," Societe Generale analyst Robin
"I think copper will struggle to go above $7,000. We might
have seen the best of the rebound and if there are more
shenanigans on the spread you will see it on the cash premia
rather than on the three-month price."
China's copper importers are being forced by bottlenecks in
the LME's warehousing system to queue for deliveries of metal
they have already bought, resulting in spot copper import
premiums rising by a third since mid-June.
This helped push cash copper on Tuesday to an $8 premium
against the benchmark three months contract, the highest in a
year. The premium eased to $1.5 a tonne by Thursday.
Helping to diminish supply tightness, mining is now running
at full capacity at Freeport McMoRan Copper and Gold's
Indonesian unit, the world's second-largest copper mine, after a
prolonged closure due to an accident at the site.
Meanwhile, the Mongolian government and Rio Tinto <RIO.AX
RIO.L>> have not yet reached an agreement on whether the miner
can repatriate earnings from the $6.2 billion Oyu Tolgoi mine,
the country's mining minister said, delaying first copper
In other metals, benchmark tin closed down 0.4
percent at $20,000 a tonne.
Indonesia's overhaul of tin trading rules that raises
minimum purity levels is expected to slash shipments from the
world's top refined tin exporter over the next few months,
potentially pushing up prices for the metal used in electronic
Aluminium, closed at $1,812 from a last bid of
$1,806 on Wednesday; zinc closed at $1,861 from $1,865
and lead ended at $2,074 from $2,078.
Stainless steel material nickel closed at $13,825