METALS-Copper near three-month low on Fed tapering concerns
* Rising supply pressures copper prices
* Lead, zinc global markets tightening
* Coming up: U.S. Midwest manufacturing; 1330 GMT
LONDON/SINGAPORE - Copper edged down on Tuesday, hovering near a three-month low hit earlier in the session after Federal Reserve officials flagged a brightening outlook for the U.S. economy, fuelling expectations the central bank may soon curb its stimulus.
Copper prices last week broke out below a relatively narrow band they had been trading in for the past three months, souring the metal's technical outlook.
Investors also sold copper on prospects of less liquidity in the markets if the Fed tapers its commodity-friendly monetary stimulus and on expectations of more supply next year.
Three-month copper on the London Metal Exchange was down 0.2 percent at $6,964 a tonne by 1029 GMT, extending losses of half a percent from the previous session. It earlier fell to $6,910, its weakest since Aug. 7.
"The small rebound from the new lows this morning was due to opportunistic buying, but uncertainty over stimulus tapering is still dominating headlines and it will still happen in 2014," VTB Capital analyst Andrey Kryuchenkov said.
Top Fed officials from opposite sides of the policy spectrum pointed to improvement in the U.S. economy on Monday, adding more weight to the notion that the central bank is getting close to reducing the pace of its $85 billion-a-month asset purchases.
Scaling down the stimulus programme would reduce liquidity available to businesses and to commodity investors, eroding price support for metals.
"Market participants are also uncertain how the new Chinese economic policy will affect base metals since Beijing aims to move from an economy predominantly focused on its industrial and export base to one focused on domestic consumption," Kryuchenkov added.
China, which announced its boldest set of economic and social reforms in nearly three decades on Friday, accounts for about 40 percent of copper consumption.
The red metal is predominantly used in power, construction and infrastructure.
A MOUNTAIN OF COPPER
Copper is also under pressure from prospects of rising supply, with a top miner having agreed a 31 percent rise in processing fees for 2014. Miners tend to pay higher processing fees when there is more supply.
"We continue to see supply outstripping demand over the next 24 months, which will mean any price rallies for copper will be short-lived," Deutsche Bank said in a note.
In other metals, the global lead market was in deficit by 46,000 tonnes in the first nine months of the year, compared with a surplus of 80,000 a year earlier, the Lisbon-based International Lead and Zinc Study Group (ILZSG) said.
ILZSG data also showed the global zinc market surplus had shrunk by more than half year-on-year to 38,000 tonnes.
"In both cases, this is attributable to significantly increased demand which clearly outstripped the growth in supply. The situation on both markets is likely to tighten further as a number of larger mines reach their end-of-life over the next few years and insufficient replacements are available," Commerzbank said in a note.
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