METALS-Copper falls as investors hold out for more on U.S. deal
* Eurozone factory output increases 1 pct, above forecasts
* China grid spending slows despite strong copper imports
* Rio Tinto may be forced to stockpile copper at Oyu Tolgoi
LONDON, Oct 15 (Reuters) - Copper edged down on Tuesday as signs of progress over the U.S. debt ceiling showdown was not enough to convince investors worried about a growing surplus to bid the red metal higher for a fourth consecutive day.
There were positive comments from U.S. senators signalling that a last-minute deal to raise the debt ceiling and end the government shutdown could be reached. The Treasury is due to run out of money on Thursday.
Copper prices bounced last week from the bottom end of the $7,000-7,500 range in place since early August but momentum appears to be spluttering, with risk appetite constrained until U.S. lawmakers forge an actual deal on the U.S. debt problem.
"I think that at some point the market participants will see that copper at the current levels is not reflecting the fundamentals," said Eugen Weinberg, analyst at Commerzbank.
Weinberg added that signs of restocking in China should also have lifted copper from its current doldrums. Copper imports from China, the world's top copper consumer, jumped 18 percent in September, reversing from a fall in August, as importers boosted orders ahead of a seasonal pickup.
Benchmark three-month copper on the London Metal Exchange fell 0.38 percent to $7,227.75 at 1013 GMT. In the previous session it had gained 0.8 percent.
Weighing on copper, global miner Rio Tinto raised its forecast copper output for 2013 after a better-than-expected recovery at its landslide-hit U.S. Kennecott mine and it posted record iron ore and coal output in the third quarter.
On the upside however, data out on Monday from the euro zone, the world's second-biggest copper consumer, showed August factory output beat expectations, jumping 1.0 percent.
Improving global growth helped copper stocks on the LME fall by 5,150 tonnes to 503,425 tonnes, their lowest point since early March. Overall copper stocks have dropped almost 17 percent since September 3.
While a lot of these falls might be linked to improved demand from China, some are reluctant to place too much emphasis on a bullish Chinese growth outlook.
Barclays said in a note that Chinese copper demand could lose some momentum into the year-end as power sector spending peters out, with September grid investment falling 15 percent in 2013's first year-on-year decline.
"Total spending is still likely to exceed targets set at the beginning of the year, and the power sector has been a main driver of strong copper demand in China. But if grid growth has already peaked and stabilised, copper demand could, too," it said.
In other metals traded, aluminium eased 0.25 percent to $1,865, with daily LME data showing stocks of the metal jumped by more than 20,000 tonnes to 5.34 million tonnes, with most of the increases centred in Detroit warehouses.
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