July 16, 2015 / 10:40 AM / 5 years ago

METALS-Copper gains after Greek vote, capped by firmer dollar

* Fall in LME nickel stocks positive for prices-analyst

* China stock market rebounds, but investors cautious (Adds closing prices)

By Eric Onstad

LONDON, July 16 (Reuters) - Copper rose on Thursday after Greek lawmakers passed a tough bailout programme and the Chinese stock market stabilised, but a stronger dollar and uncertainty over global growth capped gains.

While the Greek parliament approved austerity measures demanded by its creditors, Germany’s finance minister questioned whether Athens would ever get a third bailout.

“There may be some short-term fixes on Greece, but in the longer term, markets are still going to see it as a bit of a headwind to growth overall,” Robin Bhar, head of metals research at Societe Generale in London, said.

Three-month copper on the London Metal Exchange ended up at $5,560 a tonne, from $5,531 at Wednesday’s close. Prices are struggling to regain upward momentum after plunging to a six-year low of $5,240 a tonne last week.

A stronger dollar added to pressure on metals prices, by making the sector more expensive for buyers holding other currencies. Federal Reserve Chair Janet Yellen repeated her view that the Fed is likely to raise interest rates later this year if the U.S. economy expands as expected.

“There are still growth headwinds, currency headwinds, so prices will struggle to maintain rallies,” Bhar said. “This risk-on, risk-off mentality will characterise our summer period and the weeks ahead of us look to be pretty choppy.”

China’s stock markets rebounded on Thursday, but traders were uncertain whether Beijing could contain the volatile equities markets after last week’s crash. ID:nZZN2RI200]

“They will have to cut rates further and use fiscal stimulus to keep the economy going,” a trader said. “Metal prices may have bottomed, but for higher levels they may need to do more on the property and infrastructure front.”

In other metals, LME nickel rose to $11,630 from $11,495, after hitting a six-year low of $10,430 last week.

“The most significant development at the moment, I think, is not nickel prices having hit six-year lows, but after LME stocks having increased at a breakneck pace since 2012, this month has shown the first sign of a drawdown of these stocks,” Thomas Hohne-Sparborth of consultancy Roskill told the Reuters Global Base Metals Forum.

He forecasts prices recovering to $16,000 by December.

Aluminium closed at $1,716 from $1,718, and zinc at $2,073 from Wednesday’s last bid at $2,075.

Lead was lower at $1,840 from $1,873, and tin gained to $15,150 from $14,670.

PRICES

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 Pratima Desai; Editing by Jane Merriman and Susan Fenton)

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