NEW YORK/LONDON, June 17 (Reuters) - Copper prices slumped to their lowest in nearly one week on Thursday, as concerns about demand from top consumers the United States and China resurfaced, reflected in worse-than-expected economic data and the first inventory build in a month.
Copper for July delivery HGN0 on the New York Mercantile Exchange's COMEX division sank 9.00 cents, or 3 percent, to settle at $2.9055 per lb, near its session low $2.8895, which marked its lowest level since June 11.
On the London Metal Exchange, benchmark copper CMCU3 also hit a near one-week low at $6,410 a tonne, before ending at $6,446, down $209 on the day.
Hitting sentiment, the Philadelphia Federal Reserve Bank reported that factory activity growth plunged in the U.S. Mid-Atlantic region, and the Labor Department reported an unexpected rise in U.S. jobless claims.
The trigger for the sell-off, which saw copper retreat from a two-week high of $6,775 a tonne and nearly $3.05 per lb on Wednesday, was a plunge in May U.S. housing starts.
"One of the reasons for copper falling is the statistics from the United States yesterday," said Charles Kernot, an analyst at Evolution Securities.
"With these housing issues in North America compounding all the fiscal, monetary problems in Europe, the uncertainty is going to continue for a while until we get through both of these situations."
Justin Lennon, an analyst with Mitsui Bussan Commodities in New York, said a disappointing market reaction from Chinese traders returning from their three-day absence for the Dragon Boat Festival cast further doubts about near-term demand prospects.
"There are really two very large forces in the copper market. One is consumption by China, and the second one is the expectation of China's consumption by the investor community," he said. "Without the beast that is China to take in metal, a market surplus becomes more apparent."
Latest data shows copper stocks in LME warehouses rose 1,025 tonnes to 460,175 tonnes, the first rise since mid-May. Falling stocks since the middle of February are one reason why copper hit a year high above $8,000 a tonne and nearly $3.70 per lb on April 12.
LME stocks of nickel slipped 660 tonnes to 131,052, showing a fall of more than 20 percent since a record high of 166,476 tonnes on Feb. 5. Analysts expect this trend to reverse over the next quarter as demand wanes from stainless steel producers, which accounts for two-thirds of global consumption estimated at 1.4 million tonnes this year.
"The stainless steel production cycle has flattened out, we will see quarter-on-quarter cuts in the third quarter, nickel prices will come back," said Max Layton, analyst at Macquarie. "Aluminum prices are low enough to lead to significant production cuts in China."
China is the world's largest producer and consumer of aluminum, which is used in transport and packaging. Aluminum prices have over the past year been supported by financing deals which have tied up about 70 percent of LME stocks -- 4.48 million -- to release cash for producers and earn high returns for banks.
Nickel CMNI3 closed down $240 at $19,800 a tonne, and aluminum CMAL3 shed $39 to finish at $1,966. Zinc CMZN3 dropped $64, or 3.5 percent, to end at $1,765, while lead CMPB3 edged up $4 at $1,764. Tin CMSN3 dipped $55 to $17,745.