METALS-London copper weakens, U.S. fiscal deal euphoria fades
* Shanghai copper pares gains after hitting 2-1/2-month high at opening
* LME copper may retrace to $7,970/T - technicals
* Coming up: U.S. nonfarm payrolls, Dec; 1330 GMT
(Adds details, comments; updates prices) SINGAPORE, Jan 4 (Reuters) - London copper lost 1 percent on Friday, extending losses from the previous session as the euphoria surrounding the U.S. fiscal deal fizzled and investors turned their focus to the uncertain global economic recovery. Minutes from the U.S. Federal Reserve's December meeting showed some officials were concerned about the potential risks of the Fed's asset buying on financial markets, even if they look set to continue an open-ended stimulus programme for now.
The Fed's quantitative easing has been a crucial factor underpinning risk appetite, and the hawkish tone in the Fed minutes weighed on equities and metals. The fiscal woes in the United States are far from being over, as President Barack Obama and Republicans are facing more budget negotiations, including those on spending cuts and the debt ceiling, in the next two months. This is adding to the nervousness in the market and supporting the dollar.
The latest data from China showed its services sector saw its slowest rate of expansion in nearly a year and a half in December, following data earlier this year suggesting a revival in the world's second-largest economy. "The stimulus from the U.S. 'fiscal cliff' resolution is over and now copper investors are re-focusing on China's economy," said Zhang Ao, an analyst at Minmetals Futures. "Investors are reluctant and we haven't the physical market stir." The most-active April copper contract on the Shanghai Futures Exchange struck a more than two-month high of 58,610 yuan a tonne when the market resumed trading after a three-day public holiday, only to give up gains to 58,340 yuan ($9,400) by 0302 GMT. Three-month copper on the London Metal Exchange lost 0.9 percent to $8,081.5, but was still headed for a 2.5-percent weekly gain, its strongest such rise in a month. Technical analysis suggested that LME copper could fall to $7,970 a tonne, as it has completed a rebound that started at the Nov. 9 low of $7,506, said Reuters market analyst Wang Tao.
Investors will watch the December U.S. nonfarm payrolls data due later in the day, after Thursday's data showed that private-sector employers shrugged off a looming budget crisis and stepped up hiring. Next week, China is expected to release a string of data including inflation, trade and new loans, which will offer some clue on the health of an economy that is a top consumer of many raw materials including copper. "We won't see the high-speed growth in China as in the past," said a Shanghai-based trader, "We are still in the post-crisis mode and the global recovery is slow and fragile, which doesn't support a major rally in copper." Credit Suisse revised its copper outlook for 2013 to $8,113 a tonne from $8,000, citing improving real demand, increased risk appetite from investors and restocking in the United States and Europe. But it cautioned that the copper market will remain in surplus in 2013 to 2015. In industry news, workers at the main units of Southern Copper in Peru will hold talks soon with the global copper producer but say they could strike after Jan. 15 if negotiations break down, union leader Ricardo Juarez said on Thursday.
Base metals prices at 0302 GMT
Metal Last Change Pct Move YTD pct chg LME Cu 8081.50 -72.50 -0.89 1.92 SHFE CU FUT APR3 58340 480 +0.83 1.14 HG COPPER MAR3 368.15 -3.55 -0.96 0.79 LME Alum 2098.50 -17.50 -0.83 1.33 SHFE AL FUT MAR3 15325 -40 -0.26 -0.13 LME Zinc 2080.50 -7.50 -0.36 0.82 SHFE ZN FUT MAR3 15545 00 +0.00 0.00 LME Nickel 17414.00 -86.00 -0.49 1.51 LME Lead 2375.00 -24.00 -1.00 1.50 SHFE PB FUT 15235.00 -30.00 -0.20 -0.10 LME Tin 23890.00 -90.00 -0.38 2.09 LME/Shanghai arb^ 711
Shanghai and COMEX contracts show most active months ($1 = 6.2303 Chinese yuan)
(Editing by Miral Fahmy)