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METALS-Shanghai copper up, quiet before holidays

 * Copper on track for first monthly loss since December
 * Further downside corrections seen, may bounce in Nov
 * Little appetite to hold positions over China holidays
 * here
 (Updates prices)
 SINGAPORE, Sept 29 (Reuters) - Shanghai copper rose 1.3
percent on Tuesday and London futures traded off the previous
session's near six-week low as Chinese investors wind down
ahead of National Day and Autumn Festival holidays.
 Dealers said there was little interest in establishing
positions on Shanghai ahead of week-long holidays starting on
October 1.
 "Domestic clients have closed out their positions as they
are worried about the long holiday. But I don't think London
will slide like it did last year," a trader in Shanghai said.
 A collapse in London Metal Exchange prices, which fell by a
third in less than two weeks from late September, all but
paralysed Shanghai for most of October as daily limits hampered
efforts to catch up with the slide in international prices.
 Market open interest across Shanghai copper stands at
338,776 lots, its lowest since early March.
 Three-month copper on the London Metal Exchange MCU3 fell
$54 to $5,955 a tonne by 0703 GMT.
 Copper, which has rallied 95 percent this year, is heading
for an 8 percent fall in September, its first monthly decline
since December 2008.
 "The general feeling is that prices are pushing lower and
if copper breaks below $5,800 we will see another spike down.
But I think orders will pick up again in November. I won't buy
on dips, but I will be ready to buy on an upside breakout,"
said Jonathan Barratt, managing director of Commodity Broking
Services in Sydney.
 Shanghai's benchmark third month contract SCFc3 rose 1.3
percent to 46,470 yuan, having slipped 2.8 percent on Monday.
 Metals saw some support from a recovery in equity markets
--the ASX 200 rallied 1.6 percent .AXJO and the Nikkei added
almost 1 percent .N225.
 But the Shanghai trader said more weakness was likely.
 A rise in LME copper stocks, up 3,650 tonnes to 344,350
tonnes, undermined sentiment, and with inventories at their
highest since mid-May and Chinese imports set to slow for the
rest of the year, investors are worried that prices may have to
correct further.
 "We should expect a significant retracement. There is still
lots of physical inventory in the domestic market -- maybe more
than half a million tonnes in private warehouses," he said.
 He estimated that in addition to the privately-held
material, China's State Reserve Bureau probably held 1.5
million tonnes of copper cathode, bringing total stocks to
around 2 million tonnes.
 That contrasts with estimates by state-owned consultancy
Antaike's estimates that stocks, including the SRB, were around
1.2 million tonnes. [ID:nHKG326569]
 Nickel MNI3 was flat at $16,750, with prices are on
course for a 12 percent monthly decline, their first since
March.
 "I am also getting more interested in nickel. It's had a
larger correction than copper and been consolidating for a
while, but I think it is closer to emerging from that," Barratt
said.
 Of the complex, only lead MPB3 and tin MSN3 are on
course for a monthly rise, up 4.6 percent and 3 percent
respectively. Both markets face supply disruptions. Zinc MZN3
was flat on the month.
 In the case of lead, a crackdown on pollution in China
threatens hundreds of thousands of tonnes of capacity in the
world's largest producer of the metal. [ID:nLEAD]
 In tin, Indonesia, the world's biggest exporter of the
metal, has arrested tin traders as part of a program to shut
down illegal mining operations.
 Base metals prices at 0703 GMT
 Metal         Last       Change   Pct Move  End 2008  Pct chg
09
 LME Cu        5955.00    -54.00     -0.90    3060.00    
94.61
 SHFE Cu*     46470.00    580.00     +1.26   23840.00    
94.92
 LME Alum      1821.00    -12.00     -0.65    1535.00    
18.63
 SHFE Alum*   14705.00    175.00     +1.20   11540.00    
27.43
 COMEX Cu**     270.35     -1.15     -0.42     139.50    
93.80
 LME Zinc      1881.00      3.00     +0.16    1208.00    
55.71
 SHFE Zinc    15090.00    295.00     +1.99   10120.00    
49.11
 LME Nickel   16750.00      0.00     +0.00   11700.00    
43.16
 LME Lead      2200.00     -7.00     -0.32     999.00   
120.22
 LME Tin      14275.00   -125.00     -0.87   10700.00    
33.41
 LME/Shanghai arb^          1096
 Dollar/yuan          6.8270 \ 6.8280
 ** 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
 (Editing by Clarence Fernandez)















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