* Copper poised for small monthly gain of over 1 pct
* Traders hope Fed will keep rates near zero
* Investors await China manufacturing data
By Harpreet Bhal and Maytaal Angel
LONDON, July 29 Copper steadied after hitting a
near three-week low on Monday on concerns about top consumer
China's economy, with expectations the Federal Reserve will
reaffirm its pledge to keep U.S. interest rates near zero
Three-month copper on the London Metal Exchange fell
to its lowest since July 10 at $6,820 a tonne in intraday trade.
It recovered to end at $6,878 a tonne, up from a last bid of
$6,860 on Friday.
The metal is headed for a small monthly gain of over 1
percent for July following losses of nearly 8 percent in June.
Investors are watching for official data this week from
China gauging activity in its manufacturing sector. Last week an
initial reading from HSBC showed factory activity in July at its
slowest in 11 months.
China accounts for some 40 percent of global copper demand.
"The bigger moves over the next couple of months will
probably be on the downside. There is a risk of Chinese imports
falling off again and we have a lot of new supply set to enter
the market," said Gayle Berry, an analyst at Barclays.
"There is still a small chance of a break higher in copper
because the market is very short and the fundamental copper data
is better than people realise," she added.
Helping support copper prices was the dollar's fall to a
five-week low against a basket of currencies on expectations the
U.S. Federal Reserve intends to keep interest rates low for some
time. The Fed starts a two-day meeting on Tuesday.
A weaker dollar makes dollar-priced metals cheaper for
European and other non-U.S. investors.
Earlier, U.S. data showed pending home sales fell in June
from a near six-year high in May. Markets are
focused, however, on U.S. payrolls data that will be released on
Friday. The forecast is for 185,000 jobs to have been added in
July and a dip in the jobless rate to 7.5 percent.
A strong report would support the case for the Fed to start
rolling back stimulus. Although most economists are eyeing a
September start to stimulus withdrawal, most have scaled back
views of any aggressive changes.
"Given the recent run of economic data, there seems little
risk of the Fed suggesting that it will be any more aggressive
on tapering than current market expectations," Ric Spooner,
chief market analyst CMC Markets in Sydney, said in a note.
"The risk is all the other way, with potential for the Fed
to emphasise that it won't reduce its asset-buying program
unless unemployment continues to fall."
Also underpinning copper, Rio Tinto has put on hold
a more than $5 billion underground expansion of its giant Oyu
Tolgoi copper mine in Mongolia, after the government said
parliament needed to approve the project's financing.
In other metals traded, aluminium ended at $1,798 a
tonne from $1,794, zinc ended at $1,846 a tonne from $1,855,
lead ended at $2,065 a tonne from $2,050, tin ended at
$19,925 a tonne from $19,450, while nickel ended at
$13,700 a tonne from $13,850.