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METALS-Copper rises as dollar weakens; supply, data restrain gains

Susan Thomas
Wednesday, 27 Nov 2013 | 6:21 AM ET

* Dollar falls, euro rises after German government deal

* No end in sight to LME aluminium's grind lower -Triland

* Coming up: U.S. durable goods orders at 1330 GMT

(Updates prices, adds comment, changes dateline from SINGAPORE)

LONDON, Nov 27 (Reuters) - Copper rose on Wednesday helped by a weaker dollar against the euro, but an improving supply pipeline of metal and a batch of data from the United States later in the session subdued gains.

Three-month copper on the London Metal Exchange was $7,089 a tonne by 1041 GMT from $7,065 at the close on Tuesday. It is on track for a 2.5-percent drop in November and has lost more than 10 percent for the year.

"The release of major U.S. economic data will be the main focus for today's trading session," Myrto Sokou, senior research analyst at Sucden, said.

"The dollar is also getting softer against the euro so that's supportive for the base metals market, specifically for aluminium and copper at the moment, so that's why you're seeing this upside momentum in early trading."

The dollar hit a one-week low against a basket of currencies after data failed to sway markets one way or the other over when the U.S. Federal Reserve would scale back stimulus.

The euro rose after a deal was struck to form a new German government and more talk emerged of European Central Bank help for struggling firms.

A weaker U.S. currency makes it cheaper for foreign investors to buy dollar-priced commodities, and typically supports prices.

U.S. data scheduled for release on Wednesday includes the October durable goods report, weekly jobless claims, the Chicago purchasing managers index (PMI) and Michigan sentiment survey for November.

The reports will give an indication of the health of the U.S. economy, the world's largest.

Trading volumes in the base metals market were low with the approach of Thursday's Thanksgiving holiday in the United States.

COPPER SURPLUS

The global market for refined copper swung into a 21,000 tonne surplus in August, rising after three straight months of a shortfall mostly due to higher production, data from the International Copper Study Group showed.

LME aluminium was $1,775.50 a tonne from $1,773 on Tuesday, close to Monday's 4-1/2 month lows of $1,768, burdened by a glut.

"Aluminium's grind to the bottom shows no signs of stopping, and concerns would certainly increase were the year's lows at $1,757 to be broken on a closing basis," broker Triland said in a note.

"We hear that buyer activity is improving in terms of contracts being negotiated and booked for 2014, but they are not looking to fix prices yet."

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

($1 = 6.0927 Chinese yuan)

(Additional reporting by Melanie Burton in Singapore, editing by William Hardy)