METALS-Copper falls for 5th day in six on China woes, dollar
* LME copper trading near 20-month lows
* China credit squeeze, slower economy may hurt demand
* Freeport resumes some output at world's No.2 copper mine
* Coming Up: German Ifo business climate; 0800 GMT
(Adds comments, updates prices) SINGAPORE, June 24 (Reuters) - London copper futures dropped for a fifth session out of six on Monday and stayed near 20-month lows, hurt by a firmer dollar and worries over top consumer China where a liquidity squeeze could curb demand already hit by slower economic growth. Copper dropped the most in two months last week given the concerns about China and a roadmap from the U.S. Federal Reserve on scaling back its stimulus that has boosted market liquidity for years and helped commodities scale historical peaks. But the bigger worry now is China where the economic recovery could be stalling and may be exacerbated by a potential credit crunch. China's central bank said on Monday that the overall liquidity in the financial system is at a reasonable level after interest rates for short-term funds spiked to extraordinary levels last week as big commercial banks held back on lending in the interbank market. "The economic slowdown and the liquidity squeeze will pressure copper prices going forward," said Helen Lau, senior mining and metals analysts at UOB-Kay Hian Securities in Hong Kong. "This will squeeze copper fabricators who need to borrow money from banks to buy copper," said Lau, adding it will also hit the use of the metal in trade financing. Three-month copper on the London Metal Exchange dropped 0.7 percent to $6,770 a tonne by 0414 GMT, not far from a low of $6,692 hit on Friday, its weakest since October 2011. The industrial metal lost nearly 4 percent last week in its biggest weekly loss since mid-April. Lau expects copper to drop below $6,500, a level last seen in July 2010. The most-traded October copper contract on the Shanghai Futures Exchange was down 0.8 percent at 48,730 yuan ($7,900) a tonne. Chinese equities fell more than 4 percent after official news reports over the weekend suggested Beijing will crack down on shadow banking, blamed for the cash crunch in the mainland.
The stronger dollar also hurt copper and other commodities priced in the greenback, including oil and gold, by making them more expensive for holders of other currencies. The dollar hit a two-week high against a basket of major currencies, adding to its best weekly gain in 19 months that was triggered by the Federal Reserve policy plan. Another dampener for copper was the resumption of some operations at the world's No.2 copper mine. Freeport McMoRan Copper and Gold Inc has restarted some operations at its Grasberg mine in Indonesia after receiving approval from the government, more than a month after a tunnel collapsed and killed 28 people.
Base metals prices at 0414 GMT
Metal Last Change Pct Move YTD pct chg LME Cu 6770.00 -48.00 -0.70 -14.64 SHFE CU FUT OCT3 48730 -410 -0.83 -15.88 HG COPPER JUL3 3.06 -0.04 -1.23 -16.29 LME Alum 1791.00 -2.00 -0.11 -13.60 SHFE AL FUT OCT3 14300 -25 -0.17 -8.74 LME Zinc 1841.00 -3.00 -0.16 -11.49 SHFE ZN FUT OCT3 14375 05 +0.03 -10.46 LME Nickel 13980.00 -95.00 -0.67 -18.05 LME Lead 2023.00 3.00 +0.15 -13.18 SHFE PB FUT 13925.00 -35.00 -0.25 -13.24 LME Tin 19725.00 -275.00 -1.38 -15.71 LME/Shanghai arb^ -368
Shanghai and COMEX contracts show most active months ($1 = 6.1329 Chinese yuan)
(Editing by Himani Sarkar)