* Financial investors cut net long positions last week
* Codelco's copper output down 1 pct in first half
By Silvia Antonioli and Harpreet Bhal
LONDON, Sept 2 Copper rose on Monday as strong
manufacturing data from top metals consumer China boosted
optimism about demand prospects for metals.
China's factories had their best growth in months in August
as domestic demand made up for weak exports, purchasing
managers' indexes (PMI) showed.
Three-month copper on the London Metal Exchange
ended at $7,240 a tonne, up from $7,095 at Friday's close.
Earlier, the metal used in power and construction rose more
than 2 percent to a session high of $7,276.50 a tonne.
"The Chinese PMI came in better than expected, and the
sector remains in expansive territory. This is definitely
lending support to base metals this morning," Commerzbank
analyst Daniel Briesemann said.
"The data shows the Chinese economy is on a track to regain
strength, and that should be reflected in higher demand for
Separately, a private sector report showed that China's
factory activity expanded for the first time in four months in
August, and an official report at the weekend showed activity
grew at the fastest pace in more than a year with a jump in new
Copper gained 3.2 percent in August, its biggest monthly
rise since May, but prices hit a three-week low of $7,081.50 a
tonne on Friday.
"The base (metals) spectrum reacts positively to the
improved PMI data across the board, the biggest gains being seen
in copper, which reflects both its marginally short positioning
and its use as a global growth proxy," George Adcock, an analyst
at Marex Spectron, said in a note.
"The Chinese data further supports our macro signals which
continue to point towards improved growth."
Hedge funds and money managers reduced long positions in
copper futures and options on U.S. markets for the week ended
Aug. 27, a report by the Commodity Futures Trading Commission
showed on Friday.
"Historically speaking, this is a relatively low level of
optimism that is unlikely to pose any obstacle to rising
prices," Commerzbank said in a note.
Investors were also weighing the risk of supply tightness
due to diminishing ore grades or potential labour strikes, which
have already disrupted operations at some of the world's largest
copper mines in the past.
Codelco, the world's largest copper miner, said
on Friday, its output of the metal in the first half of the year
fell 1 percent to about 758,000 tonnes because of diminishing
ore grades and harder mineral in its deposits.
In other metals, battery material lead ended at
$2,175 from a close of $2,151.50 on Friday. Aluminium,
untraded at the close, was bid at $1,829 from a last bid of
Tin ended at $21,225 from $21,225, and zinc
closed at $1,907 from $1,905. Nickel ended at $13,750