MARKETS-METALS (UPDATE 4)
* China GDP production data high on agenda
* U.S. housing market data could reinforce trend
* LME stocks on the radar, but investors bullish
(Updates prices)
By Pratima Desai
LONDON, Jan 20 (Reuters) - Copper slid on Wednesday, knocked by worries about demand after the latest move to tighten monetary policy in top consumer China, but analysts say strong growth data later this week will reinforce bullish sentiment.
Benchmark copper on the London Metal Exchange was trading at $7,460 a tonne in official rings from $7,545 a tonne at the close on Tuesday. The metal used in power and construction earlier hit a session low of $7,452 a tonne.
Losses were triggered by news that Chinese authorities have instructed some major banks to curb their lending over the rest of this month. Last week China raised bank reserve requirements for the first time since June 2008.
For graphic on china credit, investment growth click on http://graphics.thomsonreuters.com/0110/CN_LNDG0110.gif
"But tonight we will see strong economic data from China, this will give commodity prices fresh support," said Daniel Briesemann, analyst at Commerzbank.
Thursday sees the release of fourth-quarter gross domestic product and December industrial production data in China, which accounts for more than 30 percent of global copper demand estimated at 19 million tonnes this year.
Before then the market will get an inkling of how the land lies in the United States, the world's second largest consumer of copper, with the release of December housing market data at 1330 GMT.
"A second leg lower is possible when the U.S. housing numbers comes out ... recent data hasn't been too hot," a trader on the LME floor said.
He added the stronger dollar against the euro was also partly behind negative sentiment in base metals, which could extend losses if U.S. producer prices raise the spectre of higher interest rates in the United States.
CHINA PREDOMINANT
Overall, mining firms and investors are bullish about prospects for industrial metal prices, some of which have more than doubled over the past year.
"Investors remain confident in the global economic recovery, still betting on higher metals prices as we go forward," said VTB Capital in a note.
"(However) a rapid manufacturing recovery is much needed in the West in order to help use existing stockpiles and fuel demand growth that is now predominantly driven by China's success story."
Stocks of copper in London Metal Exchange warehouses at 526,650 tonnes are more than double the levels seen in the middle of July and the highest in 10 months.
Aluminium inventories at above 4.62 million tonnes are within touching distance of record highs.
But the aluminium market is focused on financing deals -- where banks buy material now and sell it forward, generating a return that far surpasses money market interest rates.
Effectively these deals help release cash for producers, but they also tie up material and have been a feature in other industrial metal markets.
Aluminium used in transport and packaging was trading at $2,284 a tonne from $2,293 on Tuesday, battery material lead was quoted at $2,420/2,421 from $2,425 and stainless steel ingredient nickel at $19,055 from $19,200.
Zinc, used to galvanise steel, was at $2,488 a tonne from $2,503 and soldering material tin was quoted at $17,950/17,975 from Tuesday's last bid at $17,975.
For graphics showing global copper and aluminium stocks click on:
To see an analysis on record commodities fund investments in 2010, click on: Metal Prices at 1307 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 338.60 -5.10 -1.48 332.75 1.76 LME Alum 2280.00 -13.00 -0.57 2230.00 2.24 LME Cu 7477.00 -68.00 -0.90 7375.00 1.38 LME Lead 2422.00 -3.00 -0.12 2432.00 -0.41 LME Nickel 19055.00 -145.00 -0.76 18525.00 2.86 LME Tin 17950.00 -150.00 -0.83 16950.00 5.90 LME Zinc 2487.00 -16.00 -0.64 2560.00 -2.85 SHFE Alu 17410.00 -325.00 -1.83 17160.00 1.46 SHFE Cu* 61000.00 -630.00 -1.02 59900.00 1.84 SHFE Zin 20795.00 -155.00 -0.74 21195.00 -1.89 ** 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 Pratima Desai; editing by Sue Thomas)
