UPDATE 3-Shanghai copper falls; LME eases as Europe opens

(Updates prices to Shanghai close)

By Nick Trevethan

SINGAPORE, May 27 (Reuters) - Shanghai copper fell on
Tuesday and London prices also edged lower, but investors were
unwilling to make big bets on direction without a clearer
picture of European and U.S. sentiment following a holiday
weekend.

Shanghai August copper SCFQ8 closed 510 yuan or 0.8
percent down at 62,230 yuan ($8,972) a tonne. London Metal
Exchange copper for delivery in three months MCU3 ticked down
$15 to $8,165 by 0702 GMT after the bank holiday weekend.

"No one really wants to do much today. The attitude here is
to wait and see what happens once London and New York restart
after their holidays," a dealer in Singapore said.

U.S. markets were also closed on Monday for Memorial Day.

But analysts continue to worry about the absence of Chinese
restocking, noting a sharp decline in Chinese imports versus
record-breaking shipments in the first few months of 2007.

"Shanghai copper is likely to fall to 60,000 yuan in the
next month. Domestic copper consumption this year has not
picked up and is lower than a year earlier," said analyst Yang
Jun at China Futures.

"There is a similar story in London. There is not enough
energy to push copper prices higher right now due to a lack of
bullish news."

But supplies have tightened and spot material in eastern
China has started to earn a small premium above the front
month, helped by last week's sharp decline in Shanghai
inventories, which other analysts said could put a floor under
prices nearer 62,000 yuan.

At midday spot copper was assessed 275 yuan lower at
between 62,950 and 63,050 yuan, 130-230 yuan above the front
month, June.

The gap in prices between the London and Shanghai copper
markets widened to 4,335 yuan from 4,065 yuan on Friday,
including Chinese value-added tax. The spread hit a record
6,549 yuan on April 18.

Shanghai aluminium SAFQ8 fell 135 yuan to 19,095, while
LME aluminium fell $1 to $3,000, stubbornly holding near the
round number on concerns that higher energy prices could derail
smelter expansion plans, while demand continues to surge.
Norwegian aluminium group Norsk Hydro (NHY.OL) said overnight
that aluminium markets were stronger than expected and prices
were more likely to rise than fall. [ID:nL26276886]

Chief Executive Eivind Reiten said in an interview that
strong Chinese demand more than offset effects of a weak U.S.
economy, and saw global aluminium demand up 8-9 percent in
2008.

LME nickel MNI3 fell $450 at $23,650, and the technical
outlook for the metal was bleak, analysts said.

"The fall below $25,500 is a downtrend continuation. Weak
support is near $23,000 and longer-term support near $19,000,"
Daryl Guppy of Guppytraders.com said.

He added that even a rebound to $25,500 was insufficient to
reverse the weaker trend direction and any bounce would be
temporary. Metals prices at 0702 GMT:
Metal Last Change Pct Move End 2007 Pct chg
08
LME Cu 8165.00 -15.00 -0.18 6670.00
22.41
SHFE Cu* 62230.00 -510.00 -0.81 56880.00
9.41
LME Alum 3000.00 -1.00 -0.03 2403.00
24.84
SHFE Alum* 19095.00 -135.00 -0.70 18180.00
5.03
COMEX Cu** 375.10 -0.40 -0.11 304.10
23.35
LME Zinc 2155.00 10.00 +0.47 2370.00
-9.07
SHFE Zinc 17680.00 -300.00 -1.67 18950.00
-6.70
LME Nickel 23650.00 -450.00 -1.87 26350.00
-10.25
LME Lead 2000.00 -9.00 -0.45 2550.00
-21.57
LME Tin 23800.00 50.00 +0.21 16400.00
45.12
LME/Shanghai arb^ 4335
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
($1=6.936 Yuan)
(Additional reporting by Alfred Cang in Shanghai; Editing by
Michael Urquhart)