METALS-Strong manufacturing data fortifies copper

Published: 02 Nov 2009 07:58:56 PST

* China, U.S. manufacturing data upbeat

* Weak dollar helps boost industrial metals

* Stocks keep a lid on gains

LONDON, Nov 2 - Copper prices rose on Monday, underpinned by strong manufacturing data from the United States and China, the world's largest consumer of industrial metals, and the falling dollar.

Benchmark copper on the London Metal Exchange traded at $6,540 a tonne at 1541 GMT from a close of $6,480 on Friday, when the metal used in power and construction fell after data raised concerns about the pace of global recovery.

But on Monday the focus was on manufacturing.

A survey of manufacturing activity in the United States showed expansion gathering pace in October. The Institute of Supply Management's manufacturing index rose to 55.7 in October from 52.6 in September.

"Manufacturing data showed expansion, which is positive for base metals," said David Wilson, analyst at Societe Generale.

"But don't forget the data is backward looking and reflecting the impact of "cash for clunkers", which has driven up auto production."

Also helping boost sentiment was improving home sales numbers and construction sector activity in the United States.

The U.S. data followed manufacturing data from China, which showed the fastest pace of expansion in 18 months, and the euro zone, where factory activity expanded for the first time in 17 months.

The surveys helped offset Friday figures which showed U.S. consumer spending fell in September.

Also helping boost industrial metals prices was the dollar's fall against the euro, making dollar-priced metals cheaper for non-U.S. investors,

NERVOUS MARKETS

But keeping sentiment under wraps are rising stocks of copper in London Metal Exchange warehouses, which at 372,175 tonnes are up more than 40 percent since the middle of July and the highest since May.

"The market was nervous going into this week but the Chinese PMI was a good start. The global economy is rebounding, our view is positive," said Credit Suisse analyst Tobias Merath.

"(But) inventories are rising, everybody is asking how can inventories increase with supply side outages, that's also why we had this jumpiness last week."

Analysts said markets are also waiting for a statement on the U.S. economy from the Federal Reserve on Wednesday and U.S. payrolls data on Friday.

Before then the aluminium market will be closely watching the car and truck sales data on Tuesday. Aluminium is under pressure from LME stocks of the metal used in transport and packaging, which are near a record 4.5 million tonnes.

Three-month aluminium traded at $1,920 a tonne from $1,910, having earlier hit a two-week low of $1,885.50.

Zinc, used to galvanise steel, traded at $2,190 a tonne in rings from $2,160, recovering from falls on Friday when data showed Shanghai zinc stocks surged to 145,536 tonnes from 117,706 the week before.

Earlier zinc hit $2,132 a tonne, its lowest since October 21. But the metal ended October 9.7 percent higher, its biggest monthly rise since July, as investors bet on stronger demand and higher prices.

Battery material lead traded at $2,300 from $2,305, tin at $14,775 from $14,700, and stainless steel material nickel traded at $18,155 from $18,250 on Friday.

Metal Prices at 1546 GMT Metal Last Change Percent Move End 2008 Ytd Percent

move COMEX Cu 296.25 1.50 +0.51 139.50 112.37 LME Alum 1913.00 3.00 +0.16 1535.00 24.63 LME Cu 6522.00 42.00 +0.65 3060.00 113.14 LME Lead 2295.00 -10.00 -0.43 999.00 129.73 LME Nickel 18100.00 -150.00 -0.82 11700.00 54.70 LME Tin 14700.00 0.00 +0.00 10700.00 37.38 LME Zinc 2182.00 22.00 +1.02 1208.00 80.63 SHFE Alu 15185.00 -50.00 -0.33 11540.00 31.59 SHFE Cu* 50800.00 -400.00 -0.78 23840.00 113.09 SHFE Zin 16720.00 -110.00 -0.65 10120.00 65.22 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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