METALS-Copper drops on China concerns, but eyes weekly gain
* LME copper up 0.6 pct on week, after hitting 1-month top
* China weakness to keep copper prices under pressure
(Recasts lead, updates prices) SINGAPORE, July 26 (Reuters) - London copper futures slipped below $7,000 a tonne on Friday, falling for a second session, amid concerns over a dim outlook for demand in top consumer China where the economy is slowing. But copper is still headed for its third weekly increase in four, after hitting a one-month high of $7,119 on Wednesday as upbeat U.S. and European data helped counter more signs of weakness in the Chinese economy, where a preliminary reading this week showed manufacturing activity hitting an 11-month low. "Slowing growth in China is still likely to put greater pressure on copper prices than the temporary support from good economic data in the west," said Joyce Liu, investment analyst at Phillip Futures. China consumes about 40 percent of the world's refined copper. Three-month copper on the London Metal Exchange dropped 0.7 percent to $6,960.25 a tonne by 0733 GMT. The contract is up 0.6 percent so far this week. Losses in copper and other commodities including oil defied the weakness in the dollar. A softer dollar tends to make dollar-priced assets cheaper for buyers using other currencies. The most-traded November copper contract on the Shanghai Futures Exchange closed 0.7 percent lower at 50,040 yuan ($8,200) a tonne. Data this week showed firmer U.S. business spending plans, while U.S. home sales hit a five-year high. Private industry activity in the euro zone also expanded for the first time in more than a year. The upbeat U.S. data, however, suggests the Federal Reserve may start curbing monetary stimulus as early as September, and the potential for less liquidity may hurt commodities including copper. The Federal Reserve holds a policy meeting next week. "Indeed, if the liquidity and credit brakes are applied too hard in the U.S. and China then there is a danger of the global economy weakening again," Sucden Financial cautioned in its quarterly metals report. "We see little reason to be bullish on copper in the near term, but feel that policymakers will have to prompt stronger growth later in the year that may lead to some restocking." In China, the central government has ordered metal smelters to close outdated capacity by the end of September and dismantle it by the end of this year. Beijing has set yearly plans to close outdated capacity since 2009 as part of efforts to cut energy consumption and emissions, but the closing deadline has been brought forward from earlier years. The government is becoming more serious about tackling overcapacity.
Base metals prices at 0733 GMT
Metal Last Change Pct Move YTD pct chg LME Cu 6960.25 -49.75 -0.71 -12.24 SHFE CU FUT NOV3 50040 -360 -0.71 -13.62 HG COPPER SEP3 3.16 -0.03 -0.80 -13.48 LME Alum 1820.00 -3.50 -0.19 -12.20 SHFE AL FUT NOV3 14355 -35 -0.24 -8.39 LME Zinc 1865.75 -11.75 -0.63 -10.30 SHFE ZN FUT NOV3 14615 -70 -0.48 -8.97 LME Nickel 14145.00 -30.00 -0.21 -17.09 LME Lead 2066.00 -4.00 -0.19 -11.33 SHFE PB FUT 13965.00 -30.00 -0.21 -12.99 LME Tin 19400.00 25.00 +0.13 -17.09 LME/Shanghai arb^ -328
Shanghai and COMEX contracts show most active months ($1 = 6.1347 Chinese yuan)
(Editing by Richard Pullin and Muralikumar Anantharaman)