Copper falls as demand worries mount

By Manolo Serapio Jr.

MANILA (Reuters) - Copper fell on Monday as more data showed a deepening global recession, but prices in Shanghai looked supported by hopes the Chinese government would keep buying metals to help local smelters ride out slumping demand.

The U.S. economy contracted in the fourth quarter by the most since early 1982, shrinking by a much worse-than-expected 6.2 percent as exports dived and consumer spending fell, data released on Friday show.

The U.S. data indicates that "global demand remains in a very bad shape," commodity analyst Judy Zhu at Standard Chartered Bank said.

"Fundamentally, the situation is not good. There's still a lot of supply in the market," said a metals trader in Shanghai.

Shanghai copper for delivery in May fell to as low as 27,300 yuan a tonne, before paring losses to close at 27,630 yuan, down 220 yuan.

Copper futures on the London Metal Exchange slid 1.7 percent to $3,390 a tonne by 0710 GMT, adding to Friday's 1.5 percent decline.

The firmer dollar also weighed on prices, since a stronger U.S. currency makes metals priced in dollars costlier for holders of other currencies.

But expectations China would continue buying metals to aid Chinese smelters should support metals prices in Shanghai.