METALS-Copper up, strong US data helps ahead of Fed decision
* Hot weather lifts demand for copper tube used in air conditioners
* Dollar falls ahead of Fed policy meeting outcome
* Coming up: FOMC post-meeting statement at 1800 GMT
LONDON, July 31 (Reuters) - Copper rose on Wednesday supported by upbeat economic data from the United States which boosted market sentiment but trade was cautious ahead of a Federal Reserve policy decision. U.S. economic growth unexpectedly accelerated in the second quarter, laying a firmer foundation for the rest of the year.
The Commerce Department said gross domestic product (GDP) stepped up from the first quarter and the ADP National Employment Report showed private employers maintained a higher pace of hiring (ADP)in July, adding to the brightening economic picture. Metals demand benefits from strong economic growth but investors worry a fast U.S. recovery could lead the Fed to taper its stimulus programme, which has so far supported commodity prices. "ADP and GDP data was better than expected so that is supportive for base metals but you also have to be careful because as the macro numbers are improving the U.S. could be the first to curb liquidity and growth in China is still very slow," VTB Capital analyst Andrey Kryuchenkov said. Three-month copper on the London Metal Exchange was up more than one percent at $6,804 a tonne by 1420 GMT, paring losses from the previous session when it fell by 2 percent. It closed at $6,735 on Tuesday. The Federal Reserve will release a statement from its policy meeting at 1800 GMT on Wednesday. "Following the rapid rise in stock markets in July, we believe there is a risk of volatility and setbacks in the near term," Credit Suisse said in a research note. "Among the risks are uncertainty about growth in China, Eurozone politics and Fed tapering, but we also note the risk that growth could begin to surprise on the upside." Markets are also awaiting Key China's official manufacturing PMI to be released on Thursday. China makes up for about 40 percent of global copper consumption.
DOUBTS OVER CHINA Activity in China's vast manufacturing sector may have contracted in July for the first time in 10 months, a Reuters poll showed, signalling a protracted slowdown in the world's second-largest economy. But signs from China's physical market pointed to steady buying, which traders said was driven by copper importers with the metal then sold on the local market to raise cash, given tight credit conditions. Also, unusually hot temperatures in China have increased demand for copper tube that is used in air conditioners. China's edict to more than 1,900 companies to shut excess production capacity by September is the latest effort to slim down bloated industries, but in the aluminium sector, the cuts are just a fraction of their surpluses.
Metal Prices at 1424 GMT
Metal Last Change Pct Move End 2012 Ytd Pct
LME Alum 1778.75 2.75 +0.15 2073.00 -14.19 LME Cu 6805.00 70.00 +1.04 7931.00 -14.20 LME Lead 2043.25 13.25 +0.65 2330.00 -12.31 LME Nickel 13619.00 94.00 +0.70 17060.00 -20.17 LME Tin 19800.00 25.00 +0.13 23400.00 -15.38 LME Zinc 1832.00 -4.00 -0.22 2080.00 -11.92 SHFE Alu 14170.00 -90.00 -0.63 15435.00 -8.20 SHFE Cu* 49450.00 70.00 +0.14 57690.00 -14.28 SHFE Zin 14470.00 -35.00 -0.24 15625.00 -7.39 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07