METALS-Copper eyes biggest quarterly loss in nearly 2 years
* Liquidity worries in U.S., China, hurting sentiment
* Coming up; Germany retail sales at 0600 GMT
(Adds quotes, detail, updates prices) SINGAPORE, June 28 (Reuters) - London copper was steady on Friday, eyeing its biggest quarterly in almost two years, as jitters over liquidity in the U.S. and China tarnished the allure of commodities against a backdrop of fitful global economic growth. Copper prices have been hurt this quarter by concerns that an impending start by the United States to scale back its bond buying could impede economic recovery and cut capital available to investors. Adding to the liquidity jitters this month, a spike in short term lending rates China as industrial demand enters a softer season in the third quarter have only amplified worries over demand in the top two commodities consumers. "It's not just a roll back of stimulus but a sense that potentially the Chinese government may be taking bigger risk than they realise by standing back and not really doing anything when the intrabank market is having a melt down," analyst Sijin Cheng of Barclays in Singapore said. Three-month copper on the London Metal Exchange dipped to $6660.50 a tonne, near the three-year low of $6,602 a tonne hit on June 25, before paring losses to trade barely changed at $6,760 a tonne by 0240 GMT. Copper looked set to finish the second quarter with losses of nearly 11 percent, its poorest performance since the third quarter of 2011. China's central bank is squeezing funds out of the money market, forcing banks to borrow money at historic interest rate levels, but the manoeuvre appears to have been calculated to have limited impact on the real economy. Also undermining sentiment, growth in China's vast factory sector may have stalled in June as domestic and external demand weakened, a Reuters poll showed, boding ill for broad economic prospects in the second half. China's official Purchasing Managers' Index is due July 1. China accounts for some 40 percent of refined copper demand.
"In terms of copper demand we're entering a season of relative softness in China. From China side I see copper more likely to soften sequentially rather than strengthen," Cheng said. The most-traded October copper contract on the Shanghai Futures Exchange reversed early losses to trade at 48,670 yuan ($7,900) a tonne, up 0.23 percent. In signs the U.S. economy remained on a moderate growth path, U.S. consumer spending rebounded in May and new applications for unemployment benefits fell last week. Two influential Federal Reserve policymakers on Thursday sought to dissuade investors that monetary accommodation was fading any time soon, each saying markets have misinterpreted the U.S. central bank's intentions. Base metals prices at 0240 GMT
Metal Last Change Pct Move YTD pct chg LME Cu 6760.00 10.00 +0.15 -14.76 SHFE CU FUT OCT3 48670 110 +0.23 -15.98 HG COPPER JUL3 3.05 0.00 +0.07 -16.37 LME Alum 1772.00 7.00 +0.40 -14.52 SHFE AL FUT OCT3 14230 -40 -0.28 -9.19 LME Zinc 1848.00 -2.00 -0.11 -11.15 SHFE ZN FUT OCT3 14435 40 +0.28 -10.09 LME Nickel 13855.00 0.00 +0.00 -18.79 LME Lead 2047.75 -4.25 -0.21 -12.11 SHFE PB FUT 13910.00 -10.00 -0.07 -13.33 LME Tin 19700.00 -70.00 -0.35 -15.81 LME/Shanghai arb^ -298
Shanghai and COMEX contracts show most active months ($1 = 6.1490 Chinese yuan)
(Editing by Richard Pullin and Tom Hogue)