December 21, 2011 / 10:19 AM / in 8 years

METALS-Copper pares gains as ECB lending rally fizzles

* Euro falls vs dollar as ECB lending rally fades
    * Cancelled warrants seen in Vlissingen aluminium stocks
    * US home sales for November hint at recovery

    By Harpreet Bhal and Melanie Burton	
    LONDON, Dec 21 (Reuters) - Copper prices pared gains on Wednesday,
having earlier hit their highest in six sessions, as a heavy take-up by banks of
cheap European Central Bank loans added fuel to concerns over the region's
funding problems.	
    Benchmark copper on the London Metal Exchange (LME) was untraded in
the closing rings but was bid at $7,450 a tonne, still up by 2.6 pct from a
close of $7,260 on Tuesday.	
    The metal used in power and construction earlier hit its highest level in
more than a week at $7,573 a tonne.	
    Banks gobbled 489 billion euros at the ECB's first ever offering of
three-year funding, providing hopes a credit crunch could be avoided and that
the money might be used to buy Italian and Spanish debt. 	
    But confidence faded and stocks and the euro fell as it transpired that a
very large number of European banks had applied for the loans. 	
    "The European markets initially took it bullishly, which sparked a
short-covering rally," said analyst Leon Westgate of Standard Bank. 	
    "On the surface it looks like there continues to be funding stress. It
doesn't really solve any  problems; it just means the liquidity concerns haven't
gone away."	
    Improving economic data from the United States helped reinforce hopes of an
economic recovery and demand for industrial metals.	
    "We had some really positive U.S. housing data out yesterday, which
underpins what has been some really good data for the U.S. over the past few
months and showing that even with all the problems in Europe, U.S. growth
momentum seems to be picking up pace," said Gayle Berry, an analyst at Barcap. 	
    U.S. homes sales surged in November, adding to hints of recovery, but
revisions to data for the last four years showed the housing recession had been
much deeper than previously thought. 	
    Sentiment was also helped by data showing China's refined copper imports
jumped by nearly half on the year in November to reach the second-highest level
on record, as an open arbitrage between London and Shanghai bolstered a trend of
increased imports for financing. 	
    "What's given it (the metals market) fuel is the Chinese trade data, which
although we got a taster for it earlier in the month... I think it has still
helped to buoy sentiment," Berry said.    	
  	
     	
    VLISSINGEN BOTTLENECK	
    In other metals, three-month aluminium was untraded at the close but
bid at $1,994 from a close of $1,962 a tonne on Tuesday. 	
    Aluminium stocks in LME warehouses rose by 30,925 tonnes to another record
high of 4.95 million tonnes, the latest LME data showed. Cancelled warrants
registered for the first time in the Dutch port of Vlissingen, amounting to
145,000 tonnes, or 16 percent of its stocks. 
    This could create a bottleneck for any companies wanting to deliver metal
out, Standard Bank said in a note. 	
    "Using the 1,500 mt/day loading-out rate, there is effectively now a 97-day
queue at that location," it said.	
    "The 145,000 mt of cancelled warrants at Vlissingen compares to 109,050 mt
of cancelled warrants currently in Detroit."	
    Zinc, used in galvanising, closed at $1,851 from  $1,838, while tin
 finished at at $19,200 from $18,695.	
    Battery material lead ended at $1,967 from $1,937 and stainless
steel ingredient nickel closed at $18,975 from $18,380.  	
 	
 Metal Prices at 1715 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in 
 yuan/T
  Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                              move
  COMEX Cu       337.60        1.15     +0.34     334.65      0.88
  LME Alum      1994.00       -8.00     -0.40    2230.00    -10.58
  LME Cu        7450.00       40.00     +0.54    7375.00      1.02
  LME Lead      1966.00        7.00     +0.36    2432.00    -19.16
  LME Nickel   18975.00      110.00     +0.58   18525.00      2.43
  LME Tin      19195.00      500.00     +2.67   16950.00     13.24
  LME Zinc      1851.00       13.00     +0.71    2560.00    -27.70
  SHFE Alu     15835.00       85.00     +0.54   17160.00     -7.72
  SHFE Cu*     54620.00      880.00     +1.64   59900.00     -8.81
  SHFE Zin     14900.00      120.00     +0.81   21195.00    -29.70
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
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