February 8, 2016 / 2:41 AM / 4 years ago

METALS-London copper drops after US jobs report boosts dollar

* France says will support New Caledonia nickel industry

* Speculators cut bearish position in copper -CFTC

* Coming up: euro zone Sentix index at 0930 GMT (Adds comment, detail; updates prices)

By Melanie Burton

MELBOURNE, Feb 8 (Reuters) - London copper edged down on Monday after the dollar firmed following a mixed U.S. jobs report, with the start of a week-long holiday in China draining liquidity from the market.

U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but rising wages and an unemployment rate at an eight-year low suggested the labour market recovery remains firm.

“We think copper is vulnerable,” said analyst Lachlan Shaw of UBS in Melbourne.

“We are wary on demand and of course we have a lot of new supply hitting the market this year, even net of recent closures.”

China’s MMG Ltd flagged last month that its $10 billion new copper mine in Peru was set to ramp up production faster than some analysts had expected, which could weigh on copper markets already mired at more than six-year lows.

Three-month copper on the London Metal Exchange had slipped 0.5 percent to $4,607 a tonne by 0541 GMT, extending 1.2-percent losses from the previous session. Prices on Thursday hit a one-month high at $4,720 a tonne.

The Shanghai Futures Exchange is closed for the Lunar New Year holiday and will reopen Monday Feb. 15.

Global markets have been in turmoil since the start of the year, with stocks and commodities prices reeling, eroding inflation and making central banks increasingly dovish - a trend that could continue with more weak economic data.

China’s January exports may have fallen for a seventh month with factories still battling falling prices, but an expected jump in bank lending may underscore the government’s bid to put a floor under the slowing economy.

Hedge funds and money managers cut a bearish position in copper to the lowest since early November, in the week to Feb. 2, U.S. Commodity Futures Trading Commission data showed on Friday.

Nickel subsided to a new low at the open at $7,900 a tonne, the weakest since 2003, amid low volumes, struck by ongoing weakness in global stainless steel and a lack of production cuts.

“If this is accurate and not a rogue trade print the market is falling through a key support area at $8,200 and would signal a potential move down to $7,500,” Kingdom Futures said in a note.

France committed on Saturday to support the nickel sector in the Pacific territory of New Caledonia which has been severely hit by a slump in prices amid a mounting supply glut.


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

Reporting by Melanie Burton; Editing by Joseph Radford and Subhranshu Sahu

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