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METALS-Copper up slightly on Fed commitment, U.S., China data

Silvia Antonioli and Carrie Ho
Thursday, 25 Oct 2012 | 10:04 AM ET

* Stronger buying interest not seen until next year

* EU recession might be deeper than expected

* Coming next: U.S. jobless claims; 1230 GMT

LONDON/SHANGHAI, Oct 25 (Reuters) - Copper edged up on Thursday, snapping four sessions of losses, supported by the U.S. Federal Reserve's renewed commitment to keep stimulating economic growth and by improving manufacturing data from top metals consumers China and the United States. Benchmark copper on the London Metal Exchange was at $7,871.50 a tonne by 0945 GMT, up 0.7 percent from a close of $7,817 on Wednesday but still on track for a 2 percent loss this week, its third consecutive week of declines. The U.S. central bank on Wednesday made no changes to its plan to purchase $40 billion in mortgage-backed debt per month to push interest rates lower and spur a stronger recovery. The move, coupled with data on Wednesday showing conditions had improved a little for U.S. and Chinese manufacturers, lifted the market mood.

Worries about weak spot demand for industrial metals from China and uncertainty about the outlook for next year, however, limited gains. ``The manufacturing data is not back to the level we would like, but it was higher month-on-month, so at least things aren't deteriorating. All the recent data has been supportive, but there nothing out there that would make you want to turn bullish straight away,'' Societe Generale analyst Robin Bhar said. ``Although the feeling is that the economy is bottoming out and there should be better growth and better demand over the coming months, it may not be until early next year that we actually see stronger buying interest.'' The euro zone sovereign debt crisis continued to depress economic growth in the area, weighing on sentiment in the metals market. Businesses suffered another dismal month in October, suggesting the region's economy may be headed for a deeper recession than expected.

TOO TEPID TO HELP Many worried that a tepid rebound in China's economy may not be enough to drive up demand for base metals. China's Purchasing Managers Index in September pointed to the world's second-largest economy making a slow, steady recovery from its weakest period of growth in three years, with new orders and output at their highest in months. But analysts noted that the headline reading of 49.1 was still below the 50-point mark that separates expansion from contraction. ``The Chinese economy looks set to improve slightly in the fourth quarter, which will also lift copper demand and put a floor on base metal prices,'' said China Futures Co analyst Yang Jun. ``But for demand to rise significantly, we need to see a clear and sustained improvement in China's manufacturing PMI numbers above 50.'' Chinese spot copper demand remained lacklustre, with prices still trading at a discount of up to 200 yuan to the front-month copper contract on the Shanghai Futures Exchange (ShFE) . Weak premiums were another sign of poor buying interest. ``The premium paid on top of LME prices for copper imports into China is around $45-50,'' a Shanghai-based physical trader said. Traders put the premium at around $130 in the same period last year. In other metals, aluminium was at $1,939 from $1,938.50 Wednesday's close. Battery material lead was at $2,015.25 from $2,008, and zinc , used to galvanize steel, was at $1,853.50 from $1,855. Tin was at $20,575 from $20,275 while nickel was at $16,450 from $16,390.

Metal Prices at 0951 GMT

Metal Last Change Pct Move End 2009 Ytd Pct

move VALUE

LME Alum 1938.50 0.00 +0.00 2230.00 -13.07 LME Cu 7817.00 0.00 +0.00 7375.00 5.99 LME Lead 2007.50 -0.50 -0.02 2432.00 -17.45 LME Nickel 16395.00 5.00 +0.03 18525.00 -11.50 LME Tin 20250.00 -25.00 -0.12 16950.00 19.47 LME Zinc 1855.00 0.00 +0.00 2560.00 -27.54 SHFE Alu 15375.00 -45.00 -0.29 17160.00 -10.40 SHFE Cu* 57230.00 -270.00 -0.47 59900.00 -4.46 SHFE Zin 14860.00 -20.00 -0.13 21195.00 -29.89 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN

SHFE ZN began trading on 26/3/07