METALS-Copper falls on slow China demand, Europe crisis

* Euro slips vs dollar; Greek worries continue
* China demand in focus as businesses return from holiday
* U.S. weekly jobless claims fall

By Harpreet Bhal
LONDON, Feb 2 (Reuters) - Copper fell on Thursday on signs of slow
demand from top metals consumer China, which is returning to work after a
week-long holiday, and concerns about the risk of a chaotic default in Greece.
Benchmark copper on the London Metal Exchange (LME) closed at
$8,345 from a close of $8,440 on Wednesday.
The concerns outweighed data signalling improvement in the U.S. labour
market and remarks from Federal Reserve Chairman Ben Bernanke that he was seeing
signs some of the uncertainty dampening U.S. business investment might be
waning.
The euro surrendered gains against the dollar, which was flat versus a
basket of currencies. A stronger dollar makes commodities priced in the U.S.
unit more expensive for holders of other currencies.
But worries about a resolution to Europe's debt crisis remain, and dismal
corporate results showed Europe's economy is suffering increasingly from the
problems.
Chinese consumers are also reluctant to buy copper at current levels. LME
copper rose 9.5 percent last month, and the higher London prices against
Shanghai's have discouraged imports.
"The recent price move was in anticipation of Chinese buying beyond the
Lunar New Year. I think in the short term the danger is that people are going to
be disappointed," said Nic Brown, head of commodity research at Natixis.
"Physical (copper) premiums (in China) are coming off. That to me is a clear
indication that you have a build-up of copper in bonded warehouses, which
suggests that the absolute levels of demand in China at the minute are not
good."
Credit Suisse said in a note: "For prices to increase further from here,
demand indications like physical premia or stocks would in our view need to
provide more visible evidence of an improved environment."

XSTRATA/GLENCORE MERGER
In industry news, miner Xstrata is in talks with Glencore
over an all-share merger of equals, confirming reports of a deal that could
create a combined mining and trading group worth more than 50 billion pounds
($79 billion).
"The fact that sentiment amongst companies in the commodities sector is
positive and that they expect higher prices in the long term is evident from a
planned major acquisition in the sector," Commerzbank analysts said in a note.
"A higher concentration on the producer side is likely to support prices in
the medium to long term."
Aluminium closed at $2,195 a tonne from a close of $2,265 on
Wednesday, zinc at $2,095 from a close of $2,131, tin at $24,150
from $24,155, lead at $2,164 from $2,235 and nickel at $20,850
from $20,975.

Metal Prices at 1735 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2010 Ytd Pct
move
COMEX Cu 377.75 -6.45 -1.68 444.70 -15.06
LME Alum 2205.00 -60.00 -2.65 2470.00 -10.73
LME Cu 8318.25 -121.75 -1.44 9600.00 -13.35
LME Lead 2153.75 -81.25 -3.64 2550.00 -15.54
LME Nickel 20786.00 -189.00 -0.90 24750.00 -16.02
LME Tin 23910.00 -245.00 -1.01 26900.00 -11.12
LME Zinc 2083.25 -47.75 -2.24 2454.00 -15.11
SHFE Alu 16270.00 55.00 +0.34 16840.00 -3.38
SHFE Cu* 59880.00 380.00 +0.64 71850.00 -16.66
SHFE Zin 15945.00 170.00 +1.08 19475.00 -18.13
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07