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METALS-Copper eases after US data, aluminium rises

LONDON, 18th August 2009 (Reuters) By Humeyra Pamuk and Michael Taylor

Copper retreated from earlier highs on Tuesday as unexpectedly weak U.S. housing data weighed on the price, while stronger equity markets and investors betting on renewed demand for metals offered support.

Aluminium rose more than 4 percent, shrugging off a massive rise of over 20,000 tonnes in inventories, as a dam accident in Russia raised the possibility of output cuts.

Copper MCU3 for three months delivery on the London Metal Exchange closed at $6,080 a tonne, versus Monday's close of $6,050 a tonne, while aluminium MAL3 climbed to $2,005 a tonne from $1,960.

"The whole business of commodities is subject to nothing internally and just everything to do with economic data," said Gary Mead, senior commodities analyst at Virtual Metals.

"We have far too many contradictory signs going on. Commodities are like corks on an ocean being tossed around by macro economic data and I don't see that changing for the rest of the year."

Copper, used in power and construction, hit $6,190 but eased after a government report showed that new U.S. housing starts and permits unexpectedly fell in July.

Earlier, metals and equity markets were supported by Germany's ZEW economic sentiment index which rose more than expected, reinforcing investor optimism about a recovery.

Copper has risen about 40 percent since April as funds poured money into industrial metals, betting the worst is over in the global recession and that the latter part of the year will see stronger metals demand.

"The trend is 'Don't get in the way of the funds because they're going to pump up the prices'," an LME trader said.

ALUMINIUM UPS

Aluminium rose after a turbine room flooded on Monday at Russia's Sayano-Shushenskaya hydroelectric power station, which also feeds two of RUSAL's Siberian smelters, prompting the company to consider an output cut.

"Repair works may last for up to four years, according to power station owner RusHydro," Commerzbank said in a note. "Taking this into consideration, the extent of the repercussions on the aluminium market becomes evident."

"However, the production problems in Russia will only reduce the production surpluses."

Aluminium inventories are at record highs of 4.57 million tonnes. But most of the metal being tied up in deals to release cash for producers could propel prices to new highs, some analysts say.

There are many sceptics.

"There's talk that September will be a poor month for equity markets and that makes our markets nervous," a trader on the floor of the LME said. "We've come along quite a way from $4,000 a tonne for copper and if we see a sell-off in other markets that could trigger a fall in metals as well."

Other LME metals rose, with nickel MNI3 rising 5 percent after a 3 percent fall on Monday. The metal closed at $18,850 a tonne versus $18,900 but earlier touched $19,920.

Tin MSN3 was last bid at $13,800 a tonne from Monday's $13,905/13,910 a tonne while zinc MZN3 closed at $1,795 a tonne from $1,770 and lead MPB3 ended at $1,810 from $1,780.

Metal Prices at 1613 GMT Metal Last Change Pct Move End 2008 Ytd Pct move COMEX Cu 274.20 -2.60 -0.94 139.50 96.56 LME Alum 2000.00 40.00 +2.04 1535.00 30.29 LME Cu 6065.00 15.00 +0.25 3060.00 98.20 LME Lead 1810.00 -52.00 -2.79 999.00 81.18 LME Nickel 18920.00 20.00 +0.11 11700.00 61.71 LME Tin 13895.00 -555.00 -3.84 10700.00 29.86 LME Zinc 1795.00 -115.00 -6.02 1208.00 48.59 SHFE Alu 15080.00 510.00 +3.50 11540.00 30.68 SHFE Cu* 48130.00 340.00 +0.71 23840.00 101.89 SHFE Zin 14755.00 290.00 +2.00 10120.00 45.80 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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