LONDON, Feb 8 (Reuters) - Copper rose more than 3 percent on Monday, rebounding from three-month lows hit late last week, as an influx of bargain hunting among traders and industry consumers helped push industrial metal prices higher.
By 1045 GMT, copper for three-month delivery MCU3 on the London Metal Exchange traded at $6,440 a tonne from $6,265 at the close on Friday, compared with a session high at $6,475.
"There was a big sell-off on everything last week and it was probably overdone," said Herwig Schmidt, head of sales at Triland Metals. "Maybe this is a good buying opportunity."
"Today is amazingly quiet after last week's mayhem," he added. "There is a little buying interest from the industry ... consumers of copper, for tubes and wires, have been virtually absent from the market over the last eight months."
On Friday, the red metal, used in power and construction, fell to $6,225 -- its lowest level since late October -- as a firmer dollar and worries over the health of the global economy outweighed mixed U.S. jobs data. [ID:nN04115255]
But on Monday the U.S. dollar edged down against a basket of major currencies. .DXY A dip in the U.S. currency makes dollar-denominated metals cheaper for holders of other currencies.
"We have repeatedly pointed out before, the very high price levels have lost their fundamental justification for quite some time and, consequently, a price correction was more than overdue," Commerzbank said in a note.
"We expect prices to continue to weaken during the course of the next weeks ... For the first time in six weeks, speculative financial investors reduced their net-long positions in copper."
STOCKS EASE
Falling inventories have helped cap gains in recent sessions, and on Friday copper stocks fell 50 tonnes to 541,100 tonnes.
Aluminium MAL3 traded at $2,016 versus $1,980. LME stocks for the metal, used in transport and packaging, fell 7,450 tonnes to 4.58 million tonnes.
A large portion of those aluminium stocks are tied up in finance deals, to release cash for producers and to earn banks higher returns than they would get in money markets. [ID:nGEE5BA277]
But while stocks have fallen, investors remain concerned about the pace of the global economic recovery, and further monetary tightening from China, the world's top metal consumer.
"Base metals (are) not likely to unshackle the cautious tone until China returns to normal trading conditions post China New Year holidays Feb. 22," ANZ said in a note.
Zinc MZN3 touched a high at $2,053 but was last at $2,026 a tonne from $1,940, while battery material lead MPB3 traded at $1,963.75 from $1,940.
Analysts said zinc, which gained almost 6 percent, was boosted by thin trading volumes exaggerating moves in metal prices.
A recent rise in cancelled warrants -- material earmarked for delivery from LME warehouses -- has helped boost sentiment in recent weeks.
On Friday, lead cancelled warrants were at 14,925 tonnes from 75 tonnes on Jan. 5.
Steel-making ingredient nickel MNI3 traded at $17,195 from $17,005, and tin MSN3 was at $14,970 from $15,350.
Analysts warned that nickel prices may come under pressure, after Brazilian miner Vale (VALE5.SA) said it will continue to push its Sudbury, Ontario, nickel and copper operations towards full production, regardless of whether it is able to settle an almost seven-month strike at the complex. [ID:nN05165759]
But with little on the economic calendar on Monday, market attention will shift towards this week's Chinese data banquet, including initial trade data and consumer prices around the middle of the week. ECON
For more on mining group Xstrata's outlook, click [ID:nLDE61326M]
Metal Prices at 1049 GMT Metal Last Change Pct Move End 2009 Ytd Pct
move COMEX Cu 290.00 4.60 +1.61 332.75 -12.85 LME Alum 2009.00 29.00 +1.46 2230.00 -9.91 LME Cu 6429.00 164.00 +2.62 7375.00 -12.83 LME Lead 1960.00 20.00 +1.03 2432.00 -19.41 LME Nickel 17050.00 45.00 +0.26 18525.00 -7.96 LME Tin 14920.00 -430.00 -2.80 16950.00 -11.98 LME Zinc 2020.00 80.00 +4.12 2560.00 -21.09 SHFE Alu 16160.00 45.00 +0.28 17160.00 -5.83 SHFE Cu* 52650.00 700.00 +1.35 59900.00 -12.10 SHFE Zin 17020.00 40.00 +0.24 21195.00 -19.70 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Additional reporting by Nick Trevethan in Singapore; reporting by Michael Taylor; editing by Sue Thomas)
