* Copper on track for 0.7 pct gain for the week
* Dollar drops to 5-week low vs basket of currencies
By Harpreet Bhal
LONDON, July 26 Copper fell for a second
straight day on Friday, as concerns about growth in top consumer
China weighed on the outlook for industrial metals demand, but a
weak dollar prevented further losses.
Three-month copper on the London Metal Exchange,
untraded at the close, was last bid at $6,870 a tonne from a
last bid of $7,010 on Thursday.
The metal is still headed for its third weekly increase in
four, after hitting a one-month high of $7,119 on Wednesday as
upbeat U.S. and European data helped counter signs of weakness
in the Chinese economy.
Uncertainty about the growth outlook in China, the world's
biggest copper consumer, is likely to dictate the price
direction for the metal used in power and construction, analysts
"There is still concern about the Chinese economy. Market
players seem to be weighing the weaker data against what the
Chinese government is saying about the economy and many are
waiting for more macro data next week for a more convincing
picture," said Daniel Briesemann, an analyst at Commerzbank.
China's final reading of the HSBC manufacturing purchasing
managers index (PMI) for July is due next Thursday, followed by
the HSBC services PMI on Aug. 5.
Losses in copper prices were stemmed by a drop in the dollar
against a basket of currencies to a five-week low, on caution
about the possibility of the U.S. Federal Reserve delivering a
downbeat message after its policy meeting next week.
A weak dollar makes commodities priced in the U.S. unit
cheaper for holders of other currencies.
Copper also found some support from data which showed that
copper stocks held in LME warehouses dropped by 1,775 tonnes , as inventories continue their steady decline
from 10-year highs hit in June.
Copper inventories in warehouses monitored by the Shanghai
Futures Exchange fell 3.5 percent from last Friday, the exchange
said on Friday, but analysts said the cycle of declines could be
coming to an end.
"Lower... bonded warehouse materials are placing more
emphasis on stock declines in Shanghai inventories, but we could
be coming towards the end of declines as seasonal demand passes
in the third quarter," ANZ analysts said in a note.
In industry news, Freeport McMoRan Copper & Gold Inc's
subsidiary in Indonesia will offer a 5 percent stake to
the public and is in talks with three local smelters on copper
concentrate supply deals, company and government officials said.
Benchmark aluminium, untraded at the close, was bid
at $1,794 a tonne from a close of $1,823 on Thursday. Lead
closed at $2,050 from $2,070 and tin at $19,275
Nickel closed at $13,850 from $14,175 on Thursday,
and zinc at $1,855 from Thursday's close of $1,877.50.