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METALS-Copper falls on signs of slowing China growth

Friday, 24 Jan 2014 | 7:24 AM ET

* Cash copper prices fall back against benchmark as buying demand eases

LME nickel on track to end week little changed, despite Indonesia ban

* Coming up: CFTC data on speculative positioning for copper

By Susan Thomas and Melanie Burton

LONDON/SYDNEY, Jan 24 (Reuters) - Copper dipped on Friday and was on track for its biggest weekly fall since mid-November as slowing growth in China's factories fuelled worries over demand in the world's top metals consumer.

Copper prices dropped to the lowest in more than a month on Thursday after data showed China's vast manufacturing industry shrank for the first time in six months.

"We had big pullback yesterday on the Chinese PMI data," Citi analyst David Wilson said.

"I also think China is sitting on a huge amount of copper concentrate inventory, which will get processed, and there is a lot more capacity coming on stream this year."

Three-month copper on the London Metal Exchange shed 0.17 percent to $7,194 a tonne by 1201 GMT, after falling 1.2 percent in the previous session. It is set to close the week down around 1.5 percent, having dipped to $7,190 a tonne on Thursday - the lowest level since Dec. 19.

Weaker domestic and overseas demand in January hurt Chinese factory output and drove the Flash Markit/HSBC purchasing managers' index to 49.6, its first contraction in six months, from 50.5 in December. A reading above 50 indicates growth.

"There is nothing positive for copper at the moment," Naeem Aslam, chief market analyst at Ava Trade in Dublin. "The HSBC Flash manufacturing PMI data rattled many nerves in the market."

Still, supporting prices, Europe's private sector got the new year off to a strong start, a survey showed.

Nearby tightness in the physical market has begun to ease, evidence in LME forward spreads shows, as buying continues to wind down ahead of the Lunar New Year, which begins next Friday.

LME cash copper traded $24 above the benchmark contract, down from a high of $64.50 on Tuesday.

Elsewhere, Barrick Gold Corp expects to record a further impairment charge at its Pascua-Lama gold-copper project in South America in the fourth quarter and is also looking at other possible writedowns.

LME nickel is on track to end this week little changed, having gained more than 6 percent the week before after a ban on exports of ore from Indonesia came into force.

The ban is expected to encourage stainless steel makers to turn to LME nickel stocks, which are close to record highs, and boost prices.

But the global nickel market surplus more than doubled to 180,000 tonnes in the first 11 months of 2013 compared with the same period last year, a monthly bulletin from the Lisbon-based International Nickel Study Group (INSG) showed.

LME three-month nickel fell 0.9 percent to $14,531 a tonne.

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