February 20, 2012 / 5:26 AM / 8 years ago

METALS-LME copper upbeat after China policy easing

* Traders say reserves cut positive; physical market quiet
    * U.S. markets closed for holiday
    * Coming Up: Euro zone ministers to meet on Greece bailout

 (Updates prices)	
    By Melanie Burton	
    SHANGHAI, Feb 20 (Reuters) - London copper rallied on
Monday as riskier assets were buoyed by a policy easing in
China, the top consumer of most metals, and hopes that a bailout
fund would be signed off for Greece.
    Three-month copper on the London Metal Exchange 
rallied 1.65 percent to $8,310 a tonne by 0503 GMT, off a level
of $8,396 struck earlier in the session. Copper dropped almost 4
percent last week, in its biggest weekly loss in nine weeks.    	
    The most-traded May copper contract on the Shanghai Futures
Exchange fell 0.42 percent to 59,500 yuan ($9,500) a
tonne.	
    "It is a positive reaction (to China's policy easing), but
we still have to see how sustainable these gains can be -- we
would need to see more signs of improving demand from the
physical market," said Singapore-based analyst Stefan Graber of
Credit Suisse Private Banking.	
    "The event that will set the tone for this week is the euro
group meeting. Markets are expecting a positive outcome. In
previous weeks we have seen that it is very difficult to reach a
solution for Greece, so it's not wrong to be a bit cautious."	
    China's central bank cut on Saturday the amount of cash
banks must hold in reserves, a step that is expected to boost
lending capacity by more than $50 billion, in a bid to crank up
credit creation as the world's second-biggest economy faces a
fifth successive quarter of slowing growth. 	
    Credit has been a major factor constraining commodities
demand growth in China, which accounted for around 40 percent of
global refined copper demand last year. 	
    Traders said China's easing steps may still take some time
to filter down to metals product makers, with one major domestic
trader saying he expected only an ancillary impact on his
business as such steps do not translate directly into better
access to loans.	
    "The RRR cut is definitely positive. Copper picked up a lot
from Friday's close and the arb ratio improved a lot at the
start of opening, though it retreated quickly," one
Shanghai-based trader said.	
    "The physical market is still not responding and it may take
more time to consume domestic stockpiles, since stocks built on
the ShFE on Friday."	
    Copper stocks in warehouses monitored by the Shanghai
Futures Exchange jumped to their highest in nearly a decade,
data showed on Friday, as traders routed metal to the world's
top copper consumer on hopes demand would pick up after the
Lunar New Year in January. 	
    A firm euro on hopes Greece would clinch a second bailout
fund also supported markets, sending Asian shares up about 1
percent and lifting oil prices by about $2 per barrel.
  	
    Euro zone finance ministers are expected to approve the
130-billion-euro rescue programme for Greece at a meeting on
Monday,   and while there is still scepticism over Athens'
commitments -- including implementing 3.3 billion euros of
spending cuts and tax increases -- officials said momentum was
behind approving the deal.  	
    	
 PRICES 	
                                                             
  Base metals prices at 0503 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            8310.00    135.00     +1.65      9.34
  SHFE CU FUT MAY2    59500      -250     -0.42      7.48
  HG COPPER MAR2     377.35      6.55     +1.77      9.82
  LME Alum          2180.00     16.00     +0.74      7.92
  SHFE AL FUT MAY2    16170       -05     -0.03      2.05
  LME Zinc          2001.25     56.25     +2.89      8.47
  SHFE ZN FUT MAY2    15630        55     +0.35      5.64
  LME Nickel       19901.00    251.00     +1.28      6.37
  LME Lead          2075.00     30.00     +1.47      1.97
  SHFE PB FUT      15670.00     70.00     +0.45      2.52
  LME Tin          23901.00    426.00     +1.81     24.48
  LME/Shanghai arb^    1704
 
   Shanghai and COMEX contracts show most active months
 ($1=6.2991 Chinese yuan)	
	
 (Reporting by Melanie Burton; Editing by Himani Sarkar)
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