* LME copper stocks jump by another 6,450 tonnes
* Physical traders in Europe, Asia report modest demand rise
* GRAPHIC-2016 metal returns: link.reuters.com/cag37s (Adds closing prices)
By Jan Harvey
LONDON, Sept 6 (Reuters) - Copper edged down on Tuesday, drifting back towards last week’s two-month low as a rise in inventories offset signs of a modest pick-up in buying.
Physical copper traders said demand was marginally increasing as the summer lull came to an end, though volumes remained muted. Inventories in London Metal Exchange warehouses rose further though, keeping the market under pressure.
LME copper stocks jumped 6,450 tonnes to 334,975 tonnes, the latest data showed, the highest in almost a year.
“Copper is still underperforming, and it’s still the worst performing metal this year,” Citi analyst David Wilson said.
“The LME build is slightly concerning, though that does seem to have been priced to a certain extent. We don’t know how much more there is to come.”
Three-month copper on the London Metal Exchange closed at $4,620 a tonne, down 0.1 percent, after ending the previous day little changed. LME copper is holding just above support at $4,600, a nine-week low touched last week.
Investment interest was lacklustre, with the total net long position of funds trading copper on the London Metal Exchange falling to 18,033 lots on Friday from 27,026 lots the previous week, according to the LME’s Commitments of Traders report.
That came after data from the U.S. Commodity Futures Trading Commission showed on Friday that speculators sharply increased their net short position in copper futures and options.
“In copper, the speculative community continued to increase their net short position to largest levels since June 2016 with prices losing ground over the week,” Deutsche Bank said in a note.
But traders in Europe and Asia reported a marginal rise in copper demand, which has been soft in recent months.
“Feedback from fabricators onshore points to a pick-up in orders from the construction sector in recent weeks,” Standard Chartered said in a report.
Also potentially supporting copper prices, striking workers at Codelco’s small Salvador copper deposit in Chile have blocked access to the mine and are affecting production, the company and union said on Monday.
LME nickel closed up 0.4 percent at $10,110 a tonne, while LME tin ended 0.3 percent higher at $19,450.
LME aluminium closed up 0.6 percent at $1,589 a tonne, and LME lead ended 0.2 percent higher at $1,946.50 a tonne. LME zinc closed down 1.8 percent at $2,321 a tonne.
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
Additional reporting by Melanie Burton in Melbourne; editing by David Clarke