* BOAML notes downside risks to 2017 copper forecast of 2.15/lb
* Copper speculators trim position from record short - CFTC
* Coming up: British finmin to make statement at 0600 GMT (Adds comment, detail; updates prices)
By Melanie Burton
MELBOURNE, June 27 (Reuters) - London copper advanced one percent on Monday as the dollar dropped on expectation that Britain’s vote last week to leave the European Union would delay the first U.S. rate rise of the cycle.
Britain plunged deeper into political crisis on Sunday in the wake of the referendum, leaving EU and world officials confused about what to do next.
Finance minister George Osborne said on Monday Britain’s vote to leave the European Union was likely to lead to further volatility on financial markets but said the world’s fifth-biggest economy would cope with the challenge ahead.
Jonathan Barratt, chief investment officer of Ayers Alliance in Sydney, said for industrial metals there were many unknown factors at play but a few definites - one of which is that there was “no change to U.S. interest rates on the horizon”.
A softer dollar should shore up metals against selling pressure because it makes dollar-priced commodities cheaper for holders of other currencies.
“But against that are concerns about economic growth. Hands go back in their pockets, people don’t do as much. So we may have a weaker dollar but we may also have a weaker economy,” Barratt said.
Three-month copper on the London Metal Exchange rose 1 percent in volatile trade to $4,743 a tonne by 0712 GMT, paring a 1.7-percent drop from the previous session.
Copper on Thursday hit the highest in seven weeks at $4,795 a tonne ahead of the results of the British referendum. Prices are much above the six-year low of $4,318 a tonne touched in mid-January.
Hedge funds and money managers had lowered their net short position in copper futures and options, before the vote, U.S. data showed.
“Weaker global trade and GDP patterns, and a higher risk of recession, could have very detrimental implications for energy, industrial metals, and mining commodities,” Bank of America Merrill Lynch said in a research note.
“Less trade and less mobility of people will naturally result in weaker demand for oil and copper.”
The bank noted downside risks to its $2.15/lb copper forecasts for 2017.
Elsewhere, Shanghai Futures Exchange copper posted a solid 1.2 percent gain to 36,720 yuan ($5,532) a tonne, helped by a rebound in Shanghai steel which climbed more than 5 percent on signs that a state push to consolidate the sector was taking effect.
In news, some Japanese aluminium buyers have agreed to pay producers a premium of $90 per tonne for metal to be shipped in the July-September quarter, two sources directly involved in the quarterly pricing talks said on Monday.
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 = 6.6378 Chinese yuan renminbi) (Reporting by Melanie Burton; Editing by Joseph Radford and Sherry Jacob-Phillips)