* Copper slides 3.2 percent, erasing week's gains
* HSBC China flash PMI falls to seven-month low of 49.6
By Eric Onstad and Rosalba O'Brien
LONDON, May 23 Copper slid over 3 percent on
Thursday after a weak Chinese manufacturing activity survey,
adding to fears that recovery in the top metals consumer has
stalled and wiping out copper price gains over the last week.
Benchmark three-month copper on the London Metal Exchange
closed at $7,300 a tonne, off a session low of $7,215.
It closed at $7,474 on Wednesday.
China's new orders fell, a preliminary survey of purchasing
managers showed, adding to concerns that a recovery in the
world's second-largest economy is sputtering.
China is the world's biggest consumer of industrial metals,
taking 40 percent of the global supply of refined copper.
"The big news this morning was the Chinese PMI and really I
think that's what's turned sentiment because yesterday things
were looking a lot stronger for copper," said Barclays analyst
Copper hit a six-week high of $7,534 in the previous
session, bolstered by a continued production outage at Grasberg
in Indonesia, the world's second-largest copper mine.
Operations have been suspended at Grasberg since May 15,
after a tunnel collapse killed 28 workers. A trade union
official said on Thursday all investigations into the incident
at Freeport McMoRan's mine must be completed before
India's top copper smelter, run by Sterlite Industries
, has also been shut since the end of March, with a
court hearing into complaints of polluting emissions due to
resume on Monday.
Those outages would contribute to a constricted supply that
meant the LME copper market was unlikely to revisit 18-month
lows hit early in the month of just below $6,800 a tonne,
"We still suspect that the serious mining outages will lend
the market a measure of support and do not see a retest of the
recent lows for the time being," said Edward Meir of INTL
U.S. data on Thursday that showed jobless claims dropping
more than expected last week also failed to lift metals prices.
Hints from the U.S. Federal Reserve chief on Wednesday that
the bank would end its bond-buying program earlier than expected
weighed on markets, though, as such a move would erode liquidity
and investment capital available for metals.
Earlier on Thursday, investment bank Goldman Sachs gave up
on a previous bullish recommendation and advised clients to cut
Goldman had told clients to go long in copper on March 1,
forecasting a bounce back to around $8,000 a tonne, but instead
the market tumbled, and the bank said the trade should be closed
with losses of $236 a tonne or 3.1 percent.
Other industrial metals also fell, with aluminium
closing at $1,849 from $1,884 per tonne, nickel at
$14,940 from $15,170, tin at $20,950 from $21,475, lead
at $2,045 from $2,057, and zinc at $1,856 from