* Copper consumers support prices but volumes weak
* Eyes on Greece, sovereign debt markets.
(Adds closing prices)
By Michael Taylor and Pratima Desai
LONDON, Feb 8 (Reuters) - Copper rallied on Monday as investors and consumers, seeing bargain prices and believing in the stronger China demand story, piled in.
Benchmark copper MCU3 on the London Metal Exchange ended at $6,450 a tonne from $6,265 at the close on Friday. Earlier on Monday the metal used in power and construction touched $6,475.
A frenzied sell-off across equities and commodities because of sovereign default fears and a stronger dollar last week pushed copper to $6,225, the lowest since Oct. 19, and 20 percent below this year’s high of $7,796 on Jan. 7.
“The correction was a buying opportunity, the impact of tightening in China is completely irrelevant ... Bank lending in China has actually been going into deposits, not into spending,” said David Wilson, analyst at Societe Generale.
China is the world’s largest consumer of base metals.
“Wider concerns -- the situation in some European countries and their sovereign risk had some kind of impact in terms of driving investors away from riskier assets,” Wilson said.
Worries about Greece’s sovereign debt and a potential spillover have rattled markets and boosted the dollar, which is near 8-1/2 month highs against the euro. [MKTS/GLOB]
A stronger U.S. currency makes dollar-denominated metals cheaper for holders of other currencies.
However, Germany’s Finance Minister Wolfgang Schaeuble said on Monday that the Group of Seven industrialised nations is confident the European Union will sort out Greece’s debt problems. [ID:nLDE6170PC]
“There was a big sell-off on everything last week and it was probably overdone,” said Herwig Schmidt, head of sales at Triland Metals. “Maybe this is a good buying opportunity.”
Aluminium MAL3 closed at $2,012 from versus $1,980 on Friday. LME stocks of the metal, used in transport and packaging, fell 7,450 tonnes to 4.58 million tonnes.
A large portion of those stocks are tied up in finance deals, to release cash for producers and to earn banks higher returns than they would get in money markets. [ID:nGEE5BA277]
But while stocks have fallen, investors remain concerned about the pace of the global economic recovery, and further tightening in China.
“Mixed economic data has cast doubt on the speed of the economic recovery,” Standard Bank said in a note.
“The past couple of weeks have seen commodities come under pressure as concerns over Greece and the other Southern European nations have seen the dollar strengthen.”
Traders expect trading to remain subdued until Feb. 22, after the Chinese New Year holiday.
Zinc MZN3 touched a high of $2,053 a tonne and ended at $2,022.5 from $1,940 on Friday and battery material lead MPB3 at $1,965 a tonne compared with $1,940.
Steel-making ingredient nickel MNI3 closed at $17,200 from $17,005, and tin MSN3 at $15,200 from $15,350.
Analysts say nickel may come under pressure after Brazil’s Vale (VALE5.SA) said it will push its Sudbury, Ontario operations towards full production, regardless of whether it is able to settle a strike at the complex. [ID:nN05165759]
For more on mining group Xstrata’s outlook, click [ID:nLDE61326M]
For the latest Citigroup ratings, click on [ID:nWNAB4166]
For the latest Reuters metals column, click on [ID:nLDE61718R] (Editing by Sue Thomas)