* Chinese growth data bolsters copper demand prospects
* Chinese smelter closure supports lead, zinc
* Coming up: U.S. existing home sales data on Monday (Recasts with New York closing copper price, adds New York dateline/byline, Freeport news and analyst comments)
By Chris Kelly and Michael Taylor
NEW YORK/LONDON, Oct 21 (Reuters) - Copper ended lower on Thursday, surrendering earlier gains as volatile currency markets hurt sentiment and uncertainties mounted over the size and shape of expected monetary easing in the United States.
But the industrial metal held up better than oil or gold. Third-quarter growth and industrial output data in China reflected a tightening market balance, illustrated by dwindling supplies and robust demand prospects, analysts said.
“Copper has a support out there ... it does have a tight inventory story and it does have a usage and demand story that doesn’t get taken away by the dollar,” said Frank Lesh, broker and futures analyst with Future Path Trading in Chicago.
China’s economic growth slowed to 9.6 percent in the third quarter from a year earlier, down from 10.3 percent in the second quarter, while industrial output eased to a 13.3 percent year-on-year increase. [ID:nTOE69K00X]
“This does not say to me, ‘sell copper’,” Lesh said.
A positive outlook from one of the world’s more cautious producers reinforced copper’s tightening balance and healthier demand prospects.
Freeport McMoRan Copper & Gold Inc (FCX.N) outlined plans to increase near-term copper output at some of its operations, idled in 2008 from the recession. [ID:nN21516763]
Copper for December delivery HGZ0 on the COMEX metals division of the New York Mercantile Exchange dipped 1.20 cents to end at $3.7815 per lb.
On the London Metal Exchange (LME), benchmark copper for three-month delivery CMCU3 shed $33 to close at $8,307 a tonne.
Andrey Kryuchenkov, analyst with VTB Capital, pegged copper’s losses on swings in the dollar, which tends to make dollar-priced metals pricier for non-U.S. investors when it strengthens. [USD/]
“Everybody is convinced that there will be QE but it’s the format and the actual size of it (that is uncertain),” he said, referring to quantitative easing, effectively money-printing by the U.S. Federal Reserve.
On Tuesday, copper hit a 27-month high of $8,492 a tonne before falling after China surprised markets by raising interest rates for the first time in nearly three years. [ID:nSGE69I0HU]
“All the things the (Chinese) government are doing have clearly helped to slow down the economy, but the data shows that growth remains solid,” said Alex Heath, head of base metals at RBC Capital Markets.
“It remains all about the dollar. G20 is really looking to manage more effectively the rapid and volatile currency capital flows pouring into emerging markets.”
Finance and central bank chiefs from the Group of 20 economies meet on Friday and Saturday in South Korea. [ID:nTOE69K01G]
Lead and zinc prices set multi-month highs after the third-largest Chinese zinc producer Shenzhen Zhongjin Lingnan Nonfemet (000060.SZ) was, according to a newspaper report, asked to suspend production at its Shaoguan smelter. [ID:nTOE69K083]
“Zinc is on a rip because a Chinese smelter has closed,” Citi analyst David Thurtell said.
Lead CMPB3 closed up $35 at $2,485 a tonne, after touching its highest since mid-January at $2,514.
Zinc CMZN3 hit $2,514.50 a tonne, its highest since mid-April, before ending up $34 at $2,474.
China’s production of refined lead and zinc hit records in September due to increased supplies of raw materials and expanded capacity, while monthly copper production rose 2 percent due to increased capacity. [ID:nTOE69K03E]
Aluminum CMAL3 closed up $2 at $2,364. LME stocks for the metal fell 4,700 tonnes to 4.32 million tonnes — down from record levels above 4.6 million hit in January.
Nickel CMNI3 shed $395 to finish at $23,550 and tin CMSN3 closed down $250 at $26,500. Metal Prices at 1916 GMT Metal Last Change Pct Move End 2009 Ytd Pct move COMEX Cu 378.45 -0.90 -0.24 334.65 13.09 LME Alum 2345.00 -17.00 -0.72 2230.00 5.16 LME Cu 8305.00 -35.00 -0.42 7375.00 12.61 LME Lead 2460.00 10.00 +0.41 2432.00 1.15 LME Nickel 23500.00 -445.00 -1.86 18525.00 26.86 LME Tin 26400.00 -350.00 -1.31 16950.00 55.75 LME Zinc 2450.00 10.00 +0.41 2560.00 -4.30 SHFE Alu 16330.00 5.00 +0.03 17160.00 -4.84 SHFE Cu* 62690.00 40.00 +0.06 59900.00 4.66 SHFE Zin 19680.00 390.00 +2.02 21195.00 -7.15 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Maytaal Angel in London; editing by Dale Hudson)