METALS-Copper rises after China moves to protect economy

Pratima Desai

* Companies say coronavirus could disrupt supply chains

* Strong resistance for copper at $5,925 a tonne (Adds official prices)

LONDON, Feb 4 (Reuters) - Copper bounced on Tuesday as traders and funds reversed bets on lower prices after China's central bank moved to offset the damage to economic growth and demand from the coronavirus in the top consumer.

Traders said consumers not wanting to miss the opportunity to hedge their needs at low prices also contributed to the rise.

Benchmark copper on the London Metal Exchange traded up 2.6% at $5,666 a tonne in official rings. Prices of the metal used as a gauge of economic health fell to five-month lows of $5,523 on Monday, marking a drop of nearly 13% since Jan. 16.

Eurasian Resources Group chief executive Benedikt Sobotka said he expected gains to be temporary as demand will face headwinds even when the impact of coronavirus has gone away.

"The coronavirus will pass eventually and so will its negative impact on markets," Sobotka said.

"This will pave the way for investors to re-focus on the unfinished U.S.-China trade deal, a still muted global growth outlook and growing uncertainties associated with the November U.S. Presidential elections."

CHINA: China's central bank said its huge liquidity injections through open market operations this week showed its determination to stabilize financial market expectations and restore market confidence.

The People's Bank of China (PBOC) injected a total of 1.7 trillion yuan ($242.74 billion) via reverse repos on Monday and Tuesday.

CORONAVIRUS: Hong Kong reported its first death from the coronavirus on Tuesday, the second outside mainland China from an outbreak that has killed more than 420 people, spread around the world and raised fears for economic growth.

Companies are warning that the coronavirus could disrupt supply chains or hurt bottom lines as factories and shops shut and airlines suspend flights.

"The coronavirus outbreak has...drastically shifted the Chinese and global economic outlook, and thus the commodities outlook for 2020," Citi analysts said in a note.

Citi expects copper prices to fall to $5,300 over the next three months and rise to $6,300 in 6-12 months' time due to "potential powerful policy easing from the Chinese government."

COPPER: Factory closures due to coronavirus are sapping demand for sulphuric acid, a byproduct of copper production, and will likely see smelters cut output, industry sources said on Tuesday.

TECHNICALS: Copper prices face strong resistance at around $5,925 where the 100- and 200-day moving averages are converging. Support is at $5,518 the low on Sept. 3.

OTHER METALS: Aluminium was up 1.5% at $1,712, zinc gained 3.1% to $2,212, lead rose 0.9% to $1,842, tin was little changed at $16,200 and nickel added 1% to $13,070 a tonne.

(Reporting by Pratima Desai; editing by Barbara Lewis)