* Easing political tension over Ukraine supports risk
* European equities recover from two-week slide
* Cash to three-month aluminium at narrowest since Dec '12
(Updates with closing prices)
By Harpreet Bhal
LONDON, Aug 11 Copper steadied on Monday as the
easing of tensions between Russia and Ukraine and optimism about
the outlook for China's economy and metals demand offset
expectations of rising copper supplies.
Three-month copper on the London Metal Exchange
(LME) closed at $6,995 a tonne, flat from the close on Friday.
It ended last week lower for the second week in a row, down 1.1
Russia's defence ministry said on Friday it had finished
military exercises in southern Russia, which the United States
had criticized as a provocative step in the Ukraine crisis.
Global stocks bounced after recent sell-offs, and core
government debt prices fell on Monday as markets saw receding
risks of direct conflict between Russia and Ukraine, while
Middle East tensions diminished.
"There are indications of some easing in geopolitical
tension over the weekend, and that is helping the equity
markets. Base metals are benefiting from that," said Nic Brown,
head of commodity research at Natixis.
Investors were monitoring the situation in the Middle East,
with a focus on turmoil in Iraq and on talks in Cairo between
Israel and the Palestinians on ending the month-old Gaza
Robust Chinese export numbers on Friday pointed towards
healthy metals use. But solid trade data has yet to be seen
globally, with particular questions over the impact of Russian
sanctions on the European economy and demand for metals.
This week, industrial production data from China and the
United States should paint a clearer picture about the health of
the global economy.
"The data from China has been improving for a while now, and
the gradual loosening of monetary conditions has been supportive
to growth," Brown said.
Investors are concerned, however, that prices for the metal
used in power and construction are likely to come under pressure
in the second half due to rising supply.
The copper market is expected to be in a 226,000 tonne
surplus by the end of 2014, a Reuters poll in July showed, with
the surplus seen rising to 285,000 tonnes in 2015.
Reflecting a drop in enthusiasm for copper holdings, hedge
funds and money managers cut their bullish bets in copper
markets in the week to Aug. 5, the Commodity Futures Trading
Commission said on Friday.
In other metals, aluminium closed at $2,033.50 a
tonne, down from a last bid of $2,024 on Friday. The discount to
three-month prices CMAL0-3 narrowed to $4.25 per tonne on
Friday, reflecting tightening supplies.
LME zinc closed at $2,304 a tonne from $2,295 at the
close on Friday. Prices have been weighed down by rising
inventories, with LME stocks increasing by more than 5 percent
this month. MZNSTX-TOTAL
Lead closed at $2,257 a tonne from $2,240 on Friday
and nickel at $18,650 a tonne from $18,560. Tin
closed at $22,400 from a last bid of $22,375 on Friday.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin
(Additional reporting by Melanie Burton in Sydney; editing by
Jane Baird and David Clarke)