METALS-Shanghai copper chases London to 6-week high
* Shanghai copper hits 57,770/T, highest since Oct.23
* LME December option expiry eyed
* LME cash-to-three-month contango at widest since Feb
* Coming up: U.S. durable goods orders, Oct; 1500 GMT
(Adds details, comments; updates prices) SINGAPORE, Dec 5 (Reuters) - Shanghai copper chased gains in London copper and rose to a six-week high on Wednesday, but the increase was capped by concerns over the slow progress of the U.S. fiscal talks and lacklustre demand in top consumer China. Talks in Washington to avoid the "fiscal cliff", $600 billion in tax hikes and spending cuts in early 2013, have progressed slowly. President Barack Obama has insisted on higher tax rates for the wealthiest Americans, while Republicans' unity against that position showed signs of strain. The latest HSBC survey showed slower growth in China's service sector, hindering hopes that the world's second-largest economy could turn around the corner sooner rather than later, after last weekend's factory survey found China's economy was regaining vigor. "I don't expect dramatic improvement in the economy any time soon," said Fang Junfeng, an analyst at Shanghai CIFCO Futures, adding that any substantial policy change in China will not be announced until the annual congressional meeting chooses the new cabinet. "Before then, the manufacturing sector is likely to maintain the status quo, and demand for copper remain sluggish." Three-month copper on the London Metal Exchange edged up 0.1 percent to $8,041.25 a tonne by 0321 GMT, after rising to a six-week high of $8,068 in the previous session. The most-traded March copper contract on the Shanghai Futures Exchange rose to 57,770 yuan ($9,300), its loftiest since Oct. 23, before easing to 57,630 yuan. Technical analysis suggested that LME copper will form a top at around $8,046 while Shanghai copper's gains are limited at 58,480 yuan, said Reuters market analyst Wang Tao.
LME copper's cash-to-three-month spread <MCU0-3> stood at a contango of $21.16 a tonne, its widest since mid-February, suggesting sluggish demand. Meanwhile, prices are pressured by high stockpiles in top consumer China. "The domestic stockpiles are too high and the price differential between Shanghai and London isn't good for importing," said a Shanghai-based trader, adding that spot was at a discount of over 100 yuan to front-month Shanghai copper futures contract. Investors are also eyeing the December option expiry on the LME later in the day. Prices are likely to hover around $8,000, a strike level that has attracted large open interest -- 2,583 lots of call options and 1,044 lots of puts.
Base metals prices at 0321 GMT
Metal Last Change Pct Move YTD pct chg LME Cu 8041.25 11.25 +0.14 5.81 SHFE CU FUT MAR3 57630 350 +0.61 4.10 HG COPPER MAR3 366.80 1.25 +0.34 6.75 LME Alum 2089.75 -4.25 -0.20 3.45 SHFE AL FUT FEB3 15370 -25 -0.16 -3.00 LME Zinc 2024.75 2.25 +0.11 9.74 SHFE ZN FUT MAR3 15405 35 +0.23 4.12 LME Nickel 17420.00 -85.00 -0.49 -6.89 LME Lead 2243.75 12.25 +0.55 10.26 SHFE PB FUT 15335.00 35.00 +0.23 0.33 LME Tin 21775.00 -50.00 -0.23 13.41 LME/Shanghai arb^ 959
Shanghai and COMEX contracts show most active months ($1 = 6.2256 Chinese yuan)
(Editing by Miral Fahmy)