* New China car incentives to push up copper use -Argonaut
* Coming up: U.S. ADP national employment at 1215 GMT
* Coming Up: China markets shut for a week for holidays (Adds comment, detail; updates prices)
By Melanie Burton
MELBOURNE, Sept 30 (Reuters) - London copper rose Wednesday as traders took heart from an output cut in Chile and a revival in Glencore shares, which helped to fuel a short-covering rally ahead of a week-long break in top consumer China.
“Although individually this cut (in Chile) isn’t meaningful, we’re starting to see a few - maybe it’s a reflection of financial stress in general in the big mining companies,” said analyst Daniel Morgan of UBS in Sydney.
“It’s a positive development. It doesn’t make me bullish copper because if prices lift people can turn operations back on, but it’s a support. More needed please.”
The global copper market is seen in a small 262,500 tonne surplus this year, according to median forecasts of analysts polled by Reuters in July.
Three-month copper on the London Metal Exchange had risen 1.7 percent to $5,056 a tonne by 0738 GMT, after closing little changed in the previous session when it fell to its weakest in a month at $4,915.50.
Shanghai Futures Exchange copper climbed 1.8 percent to 38,600 yuan ($6,074) a tonne. Shanghai zinc rallied 3 percent, Shanghai lead rallied 4 percent, amid short covering and positing squaring. China’s markets will close for a week from Thursday.
Glencore said on Tuesday it was strong enough to ride out current volatility in commodity markets, helping to lift the mining group’s shares by a fifth.
A battle between supporters and detractors of Glencore in the analyst community has intensified amid the sharp gyrations in the group’s share price.
Chile’s second-biggest copper mine Collahuasi, owned by Anglo American Plc and Glencore, is planning to cut output by 30,000 tonnes, and with dozens of jobs on the line the mine’s union said it is mulling how it will protest the move.
Meanwhile, China has decided to halve sales tax on small cars from Thursday, boosting local auto shares, as the government tries to revive growth in the world’s largest car market, which fuelled a recovery in Asia’s stockmarkets.
“The policy ... is expected to trigger car production recovery, which in turn will support demand for copper and steel,” Argonaut Securities said in a note.
It estimates transportation accounts for 10 percent of China copper demand. A 2-percent increase in auto sales would push up copper demand by 37,000 tonnes this year, 100,0000 tonnes next year and 166,000 tonnes in 2017.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Most active ShFE nickel
Three month LME tin
Most active ShFE tin
$1 = 6.3546 Chinese yuan Reporting by Melanie Burton; Editing by Joseph Radford and Anand Basu