July 19, 2012 / 10:23 AM / in 8 years

METALS-Copper gains 1 pct, lifted by housing data, dollar

* Copper in third day of gains, market in deficit
    * Copper up on hopes of China easing this weekend - traders
    * China house prices up in June, shows policy traction

 (Adds quotes, updates prices, previous Singapore)
    By Eric Onstad
    LONDON, July 19 (Reuters) - Copper climbed more than 1 percent on Thursday,
headed for a third day of gains, on a weaker dollar and after stronger housing
data from the United States and China bolstered sentiment about demand for
industrial metals.
    Three-month copper on the London Metal Exchange rose 1.2 percent to
$7,730 per tonne by 0956 GMT, adding to two previous sessions of modest rises.
It touched an intraday high of $7,734 a tonne, backing off from the top of the
recent range of 7,738. 
    The metal, widely used in construction and power, has gained nearly 6
percent since June 22 as hopes rose of further monetary easing by central banks
and after an EU deal to boost the euro zone.
    Some investors may be expecting that copper fundamentals will reassert
themselves following the European summer, said analyst Stephen Briggs at BNP
Paribas in London.
    "The copper market's still basically in deficit and I think it'll be tighter
in three or four months' time than it is now," said Briggs, who forecasts copper
to climb to $9,000 a tonne late this year.
    "It's a bit early to be positioning for September onwards when demand begins
to pick up, but you actually often see big moves in August in some years, so
people may be positioning ahead of the positioning."

    Prices were also lifted by signs that China could announce further monetary
easing measures as soon as this weekend after Premier Wen Jiabao said the
government would step up efforts to boost the economy in the second half.
    Chinese traders hope infrastructure investments in the next few months will
prop up demand. According to media reports, China's big four state banks doubled
their pace of lending in the first half of July from a month ago in part due to
a pickup in borrowing by government-led investment schemes. 
    The most active November copper contract on the Shanghai Futures Exchange
 climbed 0.8 percent to 56,230 yuan ($8,800) per tonne, after falling 0.3
percent previously.
    "Prices haven't moved much today as buying power is still not strong. But
talk in the market that Beijing may be announcing more monetary easing over the
weekend is keeping the shorts at bay for now," said Orient Futures Derivatives
department director Andy Du.
    In the United States, data showed groundbreaking of new homes rose in June
to its highest pace in over three years, easing some worries about an economy
showing signs of cooling. 
    A day earlier, data showed China's home prices broke eight straight months
of decline to rise in June. 
    In physical markets, traders said their copper sales were much lower
compared to a year ago.
    "In the copper downstream markets, there is a slight pick-up in state grid
construction and construction, but these are still too weak now to boost overall
demand," said an analyst with a trading firm.
    Traders added that lead is one of the strongest base metals in the Chinese
market now due to a surge in battery production this year.
    "From the statistics we've gathered, China's battery sales this year up to
the end of May rose by 12 percent -- a big boost to lead sales. Despite this,
prices have been pressured by macroeconomic uncertainties," said an analyst with
an international trader. 
    LME lead, which has shed 6 percent so far this year, rose 0.2
percent to $1,913.50 a tonne. 
    Analyst Andrew Keen at HSBC in London has cut his 2012 forecast for nickel
by 10 percent to $18,030 a tonne, but says the market may temporarily tighten
later in the year.
    LME nickel gained 0.8 percent to $16,230 a tonne.
    "We still expect the market to remain in marginal surplus of 8,000 tonnes,
but now believe that nickel production cuts, including Chinese NPI (nickel pig
iron) and delays in the ramp-up of new projects may actually push the market in
a temporary deficit in 4Q12 or 2013," he said in a note.
    In other metals, aluminium added 0.6 percent to $1,919.75 a tonne,
zinc added 0.4 percent to $1,875.75 and tin rose 0.5 percent to
 Metal Prices at 1000 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
  COMEX Cu       349.40        2.05     +0.59     344.75      1.35
  LME Alum      1919.50       10.50     +0.55    2020.00     -4.98
  LME Cu        7730.25       93.25     +1.22    7600.00      1.71
  LME Lead      1913.75        3.75     +0.20    2034.00     -5.91
  LME Nickel   16224.00      124.00     +0.77   18650.00    -13.01
  LME Tin      18852.00       52.00     +0.28   19200.00     -1.81
  LME Zinc      1875.50        6.50     +0.35    1845.00      1.65
  SHFE Alu     15615.00       50.00     +0.32   15845.00     -1.45
  SHFE Cu*     56230.00      410.00     +0.73   55360.00      1.57
  SHFE Zin     14830.00       45.00     +0.30   14795.00      0.24
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
 ($1 = 6.3702 Chinese yuan)

 (Reporting by Eric Onstad; Editing by Anthony Barker)
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