Shanghai Copper up 2%, Tracing London Gains

SHANGHAI/SINGAPORE, May 19  -- Shanghai copper rose two percent on Tuesday, chasing the London rally in the previous session, but concern over a possible oversupply weighed on sentiment.

    FUNDAMENTALS

    * Third-month benchmark Shanghai copper SCFc3 rose 2.1 percent to 35,990 yuan a tonne by 0101 GMT.

    * At the London Metal Exchange, copper for three-month delivery MCU3 rose $5 to $4,525 a tonne, building on gains in the previous session spurred by a Wall Street rally and anticipation of improved housing data from the United States. * LME copper inventories fell 4,250 tonnes to 353,550 tonnes on Monday, their lowest since early January, while cancelled warrants -- material earmarked for delivery -- fell for the third straight day to 59,850 tonnes, down 1,450 tonnes from a day earlier.

    * Experts polled by Reuters expect the rate of groundbreaking for new homes to rise in April but see it being tempered by a glut of unsold homes that will probably keep many U.S. homebuilders off the job. [ID:nN18347358] * LME zinc MZN3 edged down $8 to $1,510 a tonne. The global zinc market was in surplus by 187,000 tonnes in the first three months of 2009, but Chinese buying will support prices and keep supply tight on the London exchange. [ID:nLI311303]

    MARKET NEWS

    * U.S. stocks rallied on Monday after solid results from Lowe's Cos Inc (LOW.N: Quote), the No.2 U.S. home improvement retailer. A jump in U.S. homebuilder sentiment boosted risk appetite and supported views that the three-year housing slump
may be nearing an end. [.N]

    * U.S. oil prices edged higher above $59, as violence in Nigeria, Africa's top crude oil exporter, and a fire at a key U.S. East Coast refinery revived supply concerns. [O/R]

    (Source: Reuters)