* China central bank says will guide rates to reasonable levels
* Copper may crash in 3 months-technicals
* U.S. new home sales rise to highest in nearly five years
By Maytaal Angel
LONDON, June 25 (Reuters) - Copper rose on Tuesday, recovering from a three-year low, after China’s central bank sought to soothe fears that a credit crunch would crimp growth in the world’s top metals consumer.
China’s central bank said earlier it would guide market rates to reasonable levels, and it expected that seasonal factors that caused a recent spike in interbank market rates would gradually fade.
China accounts for around 40 percent of global refined copper demand.
Data showing sales of new U.S. single-family homes rose to their highest in nearly five years in May also helped lift copper. The metal is used widely in the construction industry.
Benchmark three-month copper on the London Metal Exchange closed at $6,805 a tonne on Tuesday, off an intra-day low of $6,602, its weakest level since July 2010. It closed at $6,670 on Monday.
“China’s central bank, having given a jolt of reality to the shadow banking sector, is making soothing noises today. (And) in the case of China, what the authorities say tends to result in action,” BNP Paribas analyst Stephen Briggs said.
But he added: “On a six-to-12-month view, we’re going to see lower numbers. Copper has moved from years of deficit to an extended period of surplus, and the price even now is more above cost of production than for other base metals.”
Copper hit a three-year low on Monday on worries that China’s central bank was engineering a tightening of cash in a bid to rein in excessive credit growth and on fears about a scaling down of U.S. monetary stimulus.
Copper, a key indicator of industrial demand, has fallen about 15 percent this year.
A slew of banks cut their 2013 copper price forecasts on Tuesday. Credit Suisse cut its average price forecast to $7,240 a tonne from $7,482, Deutsche Bank cut its forecast by 4 percent to $7,547 a tonne, while Goldman Sachs cut its forecast to $7,216 a tonne from $7,600 previously.
Copper also took a hit earlier on news that open-pit production at Freeport McMoRan Copper and Gold’s Indonesian unit, the world’s second-largest copper mine, has recovered to about 60 percent of capacity.
Freeport announced on Monday that it was ramping up output at Grasberg, six weeks after a deadly tunnel collapse at the mine. The resumption of output came much earlier than traders and analysts had expected.
Nickel closed at $13,930 a tonne, having earlier hit $13,525 a tonne, its lowest point since May 2009. It closed at $13,630 on Monday.
Tin closed at $19,875 a tonne from $19,575, aluminium at $1,784 from $1,771, zinc at $1,848.50 from $1,825 and lead at $2,055 from $1,995.