* Euro falls vs dollar after gloomy euro zone data
* China HSBC flash PMI rises but Q1 momentum seen muted
* U.S. existing home sales touch three-year high
By Harpreet Bhal
LONDON, March 21 Copper fell on Thursday as the
dollar rose versus the euro and investors moved their money out
of assets perceived as risky because of worries about a possible
financial collapse in Cyprus.
However, data from top metal consumer China showing its vast
manufacturing sector picked up in March limited copper's losses.
A preliminary survey of factory managers showed solid
first-quarter growth in the world's second-largest economy.
"It shows that economic activity in China has picked up
after the new year holiday and we expect to see improved
economic figures in coming months lending support to prices,"
said Daniel Briesemann, analyst at Commerzbank.
Three-month copper on the London Metal Exchange,
untraded at the close, was last bid at $7,590 a tonne from a
close of $7,620 on Wednesday. It is still comfortably off the
seven-month low of $7,486.25 hit on Tuesday.
The HSBC Purchasing Managers' Index for China rebounded to
51.7 in March, from 50.4 in February, on the back of stronger
new orders and production growth.
"This implies that the Chinese economy is still on track for
gradual growth recovery. Inflation remains well behaved, leaving
room for Beijing to keep policy relatively accommodative in a
bid to sustain growth recovery," HSBC said in a client note.
Weighing on prices, however, was a drop in the euro which
widened losses against the dollar, hitting New York session
lows, on a combination of upbeat U.S. data and fresh negative
headlines on Cyprus.
U.S. reports showed existing home sales in February hitting
a three-year high, further bolstering the sector's recovery and
boosting the dollar as a result. Data also showed that
manufacturing in the U.S. mid-Atlantic region expanded for a
second straight month in March.
A strong dollar makes commodities priced in the U.S. unit
more expensive for holders of other currencies.
Cyprus' uncertain financial condition remained on the radar,
with the European Central Bank giving the country until Monday
to raise billions of euros to clinch an international bailout or
face losing emergency funds for its crippled banks and
Helping fuel some bullish sentiment in copper was news that
Codelco, the world's No. 1 producer, has been unable to export
some metal from its massive mines due to a strike by port
workers in northern Chile.
That alongside the HSBC flash PMI, a likely resolution to
the Cyprus issue and a favourable arbitrage was helping spur
copper imports, a trade house analyst in Shanghai said.
"We have seen some aggressive consumer buying over the last
5-10 days. I feel it's not 100 percent related to the strong
demand pick up yet, it's more slow restocking because of the
lower flat price, and people are afraid the price will rebound,"
Latest data from the International Copper Study Group showed
the world refined copper market deficit deepened last year to
340,000 tonnes, from 216,000 tonnes in 2011, due to constrained
growth in refined production and a surge in usage in China.
In other metals, aluminium closed at $1,928 from
Wednesday's close of $1,939 while zinc closed at $1,934
Data showed zinc stocks in LME-registered warehouses fell
3,900 tonnes, with cancelled warrants, material earmarked for
delivery, at 60.11 percent of total stock.
Tin closed at $22,595 from $22,600 and lead
at $2,286 from a close of $2,172.5 on Wednesday. Nickel
closed at $16,895 from $16,810.
Growth in global production of primary nickel this year is
set to outpace consumption growth, increasing the surplus in the
global market, the Lisbon-based International Nickel Study Group