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METAL-Copper dips as U.S. tapering prospects offset China data

Maytaal Angel
Monday, 11 Nov 2013 | 8:19 AM ET

* Tapering prospects grow after strong U.S. payrolls report

* Markets await result of key China Communist Party meeting

* Copper speculators slash net longs by 13,018 lots -CFTC

LONDON, Nov 11 (Reuters) - Copper dipped on Monday with a pick-up in factory output in China offset by heightened concerns that the U.S. Federal Reserve will start reducing stimulus as soon as next month.

Also keeping the metal in check, China's Communist Party leaders gathered at the weekend for a landmark conclave, due to end on Tuesday, that will set the economic agenda for the next decade.

"We've got better Chinese data but better U.S. data brings with it the issue of tapering and a stronger dollar. We see prices around current levels or maybe lower through to the year-end," said Citi analyst David Wilson.

Three-month copper on the London Metal Exchange was $7,130 a tonne in official rings, from a last bid of $7,165 on Friday. A Veterans Day holiday in the United States and armistice remembrance holidays in several European countries, added to the quiet tone in markets.

Copper prices fell 1 percent last week, its biggest weekly fall since mid-September, but remained in a $7,000-7,420 band that has held since early August.

Surprisingly strong U.S. jobs data on Friday brought forward expectations for when the Fed could start tapering its stimulus, lifting Treasury bond yields and the dollar.

A stronger U.S. currency makes it more expensive for foreign investors to buy dollar-priced commodities, thus putting pressure on metals.

In China, factory output and export data suggested the world's No. 2 economy was stabilising after a period of slower growth, though a sharp rise in the country's inflation rate fanned worries of policy tightening.

"All of the Chinese economic data published at the weekend tallied more or less with expectations, so their impact on prices is limited," said Commerzbank in a note.

China is the world's top consumer of copper, accounting for around 40 percent of refined demand. But prices have been blunted by a pick-up in supply that has helped China's factories produce record volumes of refined copper this year.

Data out earlier showed China's refined copper output reached 637,958 tonnes in October, hitting a record for the second straight month. Primary aluminium production reached 1,951,134 tonnes in October, also a record.

U.S. data on Friday showed hedge funds and money managers slashed net long or buy positions in copper by 13,018 lots to 87,689, reversing a sharp increase the previous week.

In other metals, LME three-month lead was $2,124 from $2,140 at the close on Friday, tin was $22,860 from $22,850 and nickel was $13,875 from $13,910.

Three-month aluminium, untraded in rigns, was bid at $1,804.50 from $7,165 at the close on Friday and zinc, also untraded, was bid $1,895.50 from $1,904.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin