Copper eases in volatile trade, U.S. data support

Copper ended slightly lower Friday while lead fell by more than 3 percent as financial markets remained jittery, fretting about the state of the U.S. economy.

"Recent cross-asset market volatility has been heavily influenced by uncertainty over the U.S. sub-prime mortgage market and it has spread to other asset classes, including equities and metals," said analyst Michael Widmer at Calyon.

"However most metal prices are still well supported by fundamentals," he said.

Copper for delivery in three months on the London Metal Exchange closed at $7,750/7,760 a tonne versus the close Thursday. It traded in a wide range between $7,705 and $7,850.

In New York, copper for September delivery ended 2.45 cents higher to $3.5470 a lb on the New York Mercantile Exchange's COMEX division, after dealing between $3.5020 and $3.5720.

London lead was down $110 or 3.6 percent at $2,970/2,971.

The metal hit an all-time high of $3,500 Friday last week and since then investors have been taking profits.

"CTA's (Commodity Trading Advisors) long liquidation have pushed down prices but it should look to stabilise between $2,600 and $2,800," an LME trader said.

Earlier in the session, prices firmed after news that U.S. second-quarter gross domestic product growth was better than expected and, at an annual rate of 3.4 percent, the fastest since the first quarter of 2006.

Data on core PCE (Personal Consumption Expenditure), the Federal Reserve's favourite gauge of inflation, also showed price pressures subsided, helping cement the view that U.S. interest rates might not fall this year.

"Focus will return to the fact that the U.S. economy is still in pretty decent shape and growing in line with historical norms -- this despite the severe weakness in housing," analyst Edward Meir at Man Financial said in a report.

But mining firms continued to weigh on the indices and Anglo American, Antofagasta and Vedanta were the biggest losers on the London Stock Exchange, down by over 3.5 percent.

Most equities tracked overnight losses on Wall Street as fears grew that fallout from further weakness in the U.S. housing market might trigger a global credit crunch.

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"We see a certain element of risk reduction and that's certainly affected the metals complex," analyst Sudakshina Unnikrishnan at Barclays Capital said.

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"Prices at the moment are not being particularly driven by fundamental factors like strikes or stocks," she added.

In Chile, the world's largest copper miner, Codelco, said the latest protests had a significant impact on the El Teniente division, supplying some 418,300 tonnes last year or 25 percent of Codelco's total output. Output at El Teniente would remain suspended until Friday afternoon local time, Codelco said Friday.

CHINESE DEMAND

Analysts said higher domestic copper prices in China may depress copper imports in the short term, but Chinese demand was still seen underpinning prices.

"Strong apparent demand in China has held prices high," analyst John Meyer at Numis Securities said. The world's top consumer of copper imported 18.5 percent more scrap, or 2.6 million tonnes in the first half of this year, including 474,246 tonnes in June, up 11.5 percent from a year earlier.

Nickel, a key ingredient in stainless steel, fell to $30,400/30,450 versus $30,950 as stainless steel firms cut back production.

Aluminium ended at $2,755/2,760 against $2,737, tin was at $15,375/15,400, down from $15,495/15,500 and zinc was at $3,470/3,475 versus Thursday's $3,480.

Metal Prices at 1602 GMT Metal Last Change Pct Move End 2006 Ytd Pct

move LME Cu 7770.00 10.00 +0.13 6330.00 22.75 SHFE Cu* 67520.00 -540.00 -0.79 60080.00 12.38 LME Alum 2745.00 8.00 +0.29 2805.00 -2.14 SHFE Alu* 19610.00 -120.00 -0.61 20550.00 -4.57 COMEX Cu** 355.10 2.25 +0.64 287.10 23.69 LME Zinc 3460.00 -35.00 -1.00 4230.00 -18.20 SHFE Zinc* 28295.00 -815.00 -2.80 28915.00 -2.14 LME Nick 30400.00 -550.00 -1.78 33325.00 -8.78 LME Lead 2970.00 -110.00 -3.57 1670.00 77.84 LME Tin 15350.00 25.00 +0.16 11510.00 33.36 ** 1st contract month for COMEX copper * 3rd contact month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07