* 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 (Reuters) - 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 metals.”
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 orders.
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 $1,813.
Tin ended at $21,225 from $21,225, and zinc closed at $1,907 from $1,905. Nickel ended at $13,750 from $13,800.