RTRS: METALS-Copper rises on fund buying, demand outlook
* Copper stocks rise to highest level since October 2003
* Volumes thin as Chinese New Year hits trading
(Recasts, adds comments, changes dateline from SINGAPORE)
By Michael Taylor
LONDON, Feb 15 (Reuters) - Copper rose toward $6,900 a tonne on Monday as fund buying and an improving demand outlook offset lingering concerns about debt in some Euro zone countries.
By 1045 GMT, copper for three-month delivery MCU3 on the London Metal Exchange traded at $6,890 a tonne from $6,810 at the close on Friday and compared with a session high at $6,900.
"It does look as if risk appetite has come back," said Robin Bhar, an analyst at Credit Agricole Corporate & Investment Bank. "Copper does look to be well placed ... demand is expected to strengthen with a lot of mining companies last week in earnings statements, referring to a supply crunch."
Trading was lean in Asia due to the Lunar New Year holiday in China, Hong Kong, Singapore, Taiwan and South Korea. U.S. markets were also closed for President's Day.
Volumes on the LME's Select electronic trading system for the three-month copper contract were at 1,525 lots at 1047 GMT, compared with Friday's total of 13,644 lots.
Boosting demand sentiment, Japan's economy expanded at the fastest pace in two quarters, and more than expected, in October-December as an export recovery spurred capital spending. [ID:nTOE61805L]
Copper prices fell almost 2 percent on Friday after China surprised markets by hiking the percentage of cash banks must keep as reserves, which reduces funds available for lending. But with funds now seeing buying opportunities, the Chinese holidays offer respite from concerns over monetary policy in China, the world's largest metals consumer, analysts said.
Traders remained cautious, however, ahead of a meeting of Eurogroup ministers later in the session, where the outlook for debt-laden Greece will be discussed. [ID:nLDE61E0YM]
"This finance ministers meeting could prove disappointing again, so I wouldn't hold my breath," said Bhar. "But it looks as if metals have de-coupled (as) they're not following the euro down."
Concerns over Greece pressured the euro on Monday, with data showing currency speculators had added further bets the single European currency will fall against the dollar. [USD/]
A firmer U.S. currency makes metals priced in dollars more expensive for holders of other currencies.
INVENTORIES RISE
Also capping gains in the red metal, LME inventories rose 1,350 tonnes to 549,125 tonnes, its highest peak since October 2003.
"Prices hold up as markets see global consumption recovery outweighing declining Chinese imports," investment bank Fairfax said in a note. "Chinese Lunar New Year celebrations that started off yesterday could lead to price volatility over the week ahead as volumes will no doubt be lower."
Aluminium MAL3 traded at $2,073 from $2,055. LME stocks in the metal, used in transport and packaging, fell 5,775 tonnes to 4.55 million tonnes.
Cancelled warrants -- stocks already earmarked for delivery from LME warehouses -- rose, possibly indicating improving demand from the U.S. auto industry, analysts say.
On Friday, aluminium cancelled warrants were at 273,400 tonnes from 241,050 tonnes on Jan. 12.
"Right now the (aluminium) cancelled warrants are at the highest level ever," Eugen Weinberg, an analyst at Commerzbank said.
"Most of the movements are taking place in the U.S. … most of it is in Chicago and Detroit," he added. "It is difficult to say if this is real or not, but definitely some of this is real demand."
Steel-making ingredient nickel MNI3 traded at $18,953 from $18,550 while battery material lead MPB3 was at $2,152.25 from $2,133.
Zinc MZN3 traded at $2,210 a tonne from $2,170 and tin MSN3 was at $16,325 from $16,200.
Metal Prices at 1050 GMT Metal Last Change Pct Move End 2009 Ytd Pct
move COMEX Cu 307.90 0.00 +0.00 332.75 -7.47 LME Alum 2070.00 15.00 +0.73 2230.00 -7.17 LME Cu 6887.00 77.00 +1.13 7375.00 -6.62 LME Lead 2146.00 13.00 +0.61 2432.00 -11.76 LME Nickel 18905.00 355.00 +1.91 18525.00 2.05 LME Tin 16225.00 50.00 +0.31 16950.00 -4.28 LME Zinc 2203.00 33.00 +1.52 2560.00 -13.95 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
