* Tensions put pressure on equities, fuel dollar rebound
* China economy shows signs of stabilising, demand still
* Copper price still down more than 8 pct so far this year
By Silvia Antonioli
LONDON, Aug 28 Copper fell on Wednesday as the
dollar rose and as nervousness over a potential U.S.-led
military strike against Syria made investors more adverse to
risk, while concerns over excessive copper supply in China also
The United States and its allies geared up for a probable
military strike against Syria that could come within days.
The prospect of Western military action pushed Brent crude
oil to six-month highs and gold to its highest since May, but
knocked equities as investors shied away from assets seen as
riskier, including metals.
The tensions also fuelled a rebound in the dollar as
investors sought the greenback's safety. A stronger dollar makes
metals priced in that currency more expensive for holders of
other currencies, putting pressure on copper.
Three-month copper on the London Metal Exchange
closed at $7,290 a tonne, after peaking at $7,352.50 earlier in
the session, from $7,315 at the close on Tuesday.
"I think in the next few days we are going to see some
action in the Middle East and copper is likely to come off on
the back of that while gold and oil are likely to go higher but
we don't expect it to be that long lasting," Standard Chartered
analyst Daniel Smith said.
"But even Middle East aside, copper doesn't feel that
bullish to me. Overall we are relatively optimistic on the
demand side but also supply is doing quite well which is the
main concern for people. And demand in China is good but not
that good. I think it is still early days to get too optimistic
China, which accounts for about 40 percent of copper
consumption, is showing signs of stabilising, helped by policy
support and some improvement in global demand, the state
statistics bureau said on Monday.
TOO MUCH SUPPLY
A brightening economic picture globally has fuelled a
rebound in copper prices of more than 10 percent in the past two
months, but most of the good news is now priced in, said
Sydney-based analyst Matthew Fusarelli at AME Group.
"In China, fabricators are running down their supply chains,
there is more mine supply coming online...we don't see anything
that is going to add to demand so it's pretty hard to see a
sustained uplift in prices," he added.
Copper prices are still down more than 8 percent for the
In industry news, Indonesia has proposed several amendments
to a controversial 2014 ban on unprocessed mineral exports, the
industry minister said, as it scrambles to boost the rupiah and
restore confidence in Southeast Asia's largest economy.
Tin closed at $21,650 from $21,825 at the close on
Tuesday and nickel at $14,175 from $14,425.
Aluminium closed at $1,864.50 a tonne from $1,887 at
the close on Tuesday, zinc at $1,958 from $1,983 and
lead at $2,213 from $2,224 a tonne.