LONDON, Nov 12 (Reuters) - Copper eased on Thursday on increased demand concerns after London stock levels broke through the 400,000 tonne level, but traders said the market lacked a strong direction.
By 1050 GMT, copper for three month delivery MCU3 on the London Metal Exchange fell to $6,520 a tonne from $6,540 at the close on Wednesday and compared with a session low at $6,495.
LME copper stocks continued to rise, indicating demand has yet to recover outside China. The latest data climbed 4,800 tonnes to total 402,125 -- the highest since late April.
Nickel inventories were above 131,730 tonnes, the highest since early 1995.
"This build in inventory illustrates the fact that the physical market is looking a lot less supportive on the demand side," said Daniel Brebner, metals analyst at Deutsche Bank. "Inventories are rising and it's been happening now for two quarters."
"You're moving from a surprisingly strong market for copper this year, into one where the drivers are looking much less compelling," he added. "Into January you're looking at an environment that is not as positive."
On Wednesday, copper, used in power and construction, rose 2 percent before giving up gains, as factory output growth surged in China, the world's largest metals consumer. [ID:nPEK212006]
Adding to positive sentiment on Thursday was rising euro zone industrial output numbers. [ID:nLC146020]
But the metals demand outlook outside China, whose stockpiling have helped lift metal prices this year, remained a worry for analysts. They said price corrections lower this quarter could not be ruled out.
"You are going to see a slowdown in apparent Chinese consumption," said Brebner. "It's going to fall to where real consumption is, which is a lot lower, and you'll see inventories continue to rise."
He added that as investors priced in improvements in demand going forward, price direction will be more and more dictated by other financial markets, such as currencies.
Currency movements affected base metal markets on Thursday, with a steady U.S. currency making commodities priced in dollars more expensive for holders of other currencies. [USD/]
WAGE STRIKE
A strike over wages by workers at Konkola Copper Mines (KCM), a unit of London-listed Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz), halted most units at the facility in Zambia. [ID:nLB669456] Investors took more note of industrial disputes at mines, which could support prices and give indicators for future labour talks.
"It's one of many," said Marc Elliott an analyst at investment bank Fairfax on Konkola. "Negotiations in South American miners are underway ... it is all lending some support to prices at the moment."
Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) and Codelco formed a technology alliance, while China has extended a commercial espionage investigation into an executive at the former. [ID:nSP501629] [ID:nWLA8001]
Aluminium MAL3 traded at $1,962 from $1,964. LME stocks in the metal, used in transport and packaging, fell 3,150 tonnes to 4.53 million tonnes to continue a recent trend downwards.
Steel making ingredient nickel MNI3 traded at $16,605 from $16,850 while battery material lead MPB3 was at $2,290 from $2,304.50.
Looking ahead, a volatile ride awaits the ferro-alloys industry next year when Chinese demand is set to play an increasingly vital role, delegates at the international ferro-alloys conference in Monte Carlo said. [ID:nLB704226]
For the latest outlook from Kazakh miner ENRC (ENRC.L: Quote, Profile, Research, Stock Buzz), click on [ID:nLC405642]
Zinc MZN3 traded at $2,184.50 a tonne from $2,184 and tin MSN3 was at $14,765 from $14,725.
Metal Prices at 1054 GMT Metal Last Change Pct Move End 2008 Ytd Pct
move COMEX Cu 296.15 0.00 +0.00 139.50 112.29 LME Alum 1955.00 -5.00 -0.26 1535.00 27.36 LME Cu 6515.00 -25.00 -0.38 3060.00 112.91 LME Lead 2285.00 -19.50 -0.85 999.00 128.73 LME Nickel 16555.00 -295.00 -1.75 11700.00 41.50 LME Tin 14690.00 -35.00 -0.24 10700.00 37.29 LME Zinc 2180.00 -4.00 -0.18 1208.00 80.46 SHFE Alu 15150.00 35.00 +0.23 11540.00 31.28 SHFE Cu* 51040.00 270.00 +0.53 23840.00 114.09 SHFE Zin 16950.00 225.00 +1.35 10120.00 67.49 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Reporting by Michael Taylor; editing by William Hardy)
