MARKETS-METALS (UPDATE 4) * China move hits metals market sentiment * Analysts still bullish about copper * Market watching for China M2 money supply (Adds official prices) By Pratima Desai LONDON, Feb 12 (Reuters) - Copper tumbled on Friday as top consumer China moved to tighten monetary policy and the dollar rose against the euro, but analysts expected losses to be brief. Benchmark copper on the London Metal Exchange traded at $6,775 a tonne in official rings from $6,940 at the close on Thursday when the metal used in power and construction hit a two-week high of $6,970 a tonne. China's central bank surprised markets by raising banks' reserve requirement 50 basis points effective on Feb. 25, the second such increase this year. The move was unexpected given annual consumer inflation in January moderated to 1.5 percent from 1.9 percent in December. "People are afraid it might impact the growth prospects of the Chinese economy, said Eugen Weinberg, commodities analyst at Commerzbank. "But Chinese monetary policy is still loose and China will still be growing, so this is of no real concern." The dollar rose against the euro after the China news and a pledge by the European Union to help Greece tackle its fiscal problems did little to quell uncertainty over the country's ballooning sovereign debt. A higher U.S. currency makes dollar-denominated commodities more expensive for holders of other currencies. High stocks of copper, around one-year highs above 547,000 tonnes, were weighing on prices, but traders cancelled warrants -- material earmarked for delivery -- had doubled to above 12,000 tonnes on Thursday from Wednesday. "(Cancelled warrants) mostly in Korea are heading for China," a trader said. "It may be slow until after the Chinese holiday, but keep an eye on that number." FAVOURITE METAL However analysts expect to see higher copper prices over coming months because of strong growth and demand from China, the world's largest consumer of industrial metals. "Copper is still our favourite base metal ... We're still bullish, we believe in Chinese growth," said Colin Hamilton, analyst at Macquarie. "End user sectors in China will more than compensate for any loss from the property sector, which is a slight worry." Markets in recent weeks have also been spooked by expectations of harsher Chinese monetary tightening to avert inflationary pressures, but analysts say policy is still loose. Worries about significant tightening in China are premature, analysts say, citing expectations of 10 percent gross domestic product growth this year. Aluminium used in transport and packaging hit $2,080 a tonne, its highest since Feb. 4. It traded at $2,033 a tonne in the rings from $2,065 on Thursday. Zinc traded at $2,130 from $2,180, lead was bid at $2,095 from $2,125, tin traded at $16,195 from $16,175 and nickel was bid at $18,475 from $18,450. For ANALYSIS-Interest rate concern lurks under commodities click on Metal Prices at 1336 GMT Metal Last Change Percent Move End 2009 Ytd Percent move COMEX Cu 305.60 -7.35 -2.35 332.75 -8.16 LME Alum 2033.00 -32.00 -1.55 2230.00 -8.83 LME Cu 6786.00 -154.00 -2.22 7375.00 -7.99 LME Lead 2100.00 -25.00 -1.18 2432.00 -13.65 LME Nickel 18450.00 0.00 +0.00 18525.00 -0.40 LME Tin 16075.00 -100.00 -0.62 16950.00 -5.16 LME Zinc 2141.00 -39.00 -1.79 2560.00 -16.37 SHFE Alu 16825.00 185.00 +1.11 17160.00 -1.95 SHFE Cu* 56410.00 1020.00 +1.84 59900.00 -5.83 SHFE Zin 18345.00 270.00 +1.49 21195.00 -13.45 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

Source