* China expected to use fiscal stimulus
* Market shrugs off tumbling lead stocks
* Coming up: U.S. non-farm payrolls on Friday (Adds closing prices)
By Pratima Desai
LONDON, May 7 (Reuters) - Copper was supported on Thursday by expectations of further stimulus to boost economic growth in top consumer China, but gains were capped by equity market losses and a stronger dollar.
Three-month copper closed at $6,400 a tonne from $6,390 at Wednesday’s close. The metal used in the construction and power industries hit $6,481 a tonne earlier in the week, its highest since Dec. 15.
“Metals are looking for direction from the PBOC (China’s central bank),” said Oliver Fry, a portfolio manager at Ebullio Capital Management. “We expect more action.”
China’s central bank has already eased monetary policy by cutting interest rates and reducing the amount banks must hold as cash to try to spur bank lending. Some expect China to resort to fiscal stimulus.
However, pressure on prices for industrial metals came from the dollar, which was up after earlier losses, making commodities more expensive for non-U.S. buyers.
Worries about growth and higher oil prices, meanwhile, weighed on equities.
“The most recent decline on the Chinese equity market ... could dampen sentiment,” Commerzbank said in a note. “It will also be interesting to see whether the provisional Chinese trade figures due to be published tomorrow confirm the picture of better physical demand.”
Benchmark aluminium fell to a one-week low at $1,871.5. The metal used in transport and packaging ended down at $1,883 from Wednesday’s last bid at $1,921.
Aluminium stocks in LME-registered warehouses fell by 10,550 tonnes, but traders say that total inventories, at 3,852,700 tonnes, need to fall much further before prices rise significantly.
Zinc closed at $2,378, from $2,368, while tin dipped to $15,975 from Wednesday’s last bid at $16,150.
Battery material lead ended at $2,077 from Wednesday’s last bid at $2,082 as the market shrugged off falling stocks, down 1,825 tonnes to a five-year low of 164,525 tonnes.
“(The lead is) just being relocated, it’s not going to real end-users,” one trader said.
Nickel ended at $14,140 from $13,975, but gains are likely to be short-lived.
“The market is ... questioning if a refined deficit expected by many on account of the Indonesian ban will now materialise since global production shows no signs of slowing,” Edward Meir, an analyst at INTL FCStone, said in a note.
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
Three month LME tin (Editing by David Goodman/Ruth Pitchford)