Copper Drifts Down from 8-mth High, Tracks Dlr

NEW YORK/LONDON, June 11-- Copper climbed to a fresh eight-month high before retreating on Wednesday, as the market consolidated its gains and a late-session rebound in the U.S. dollar restrained any further advance.

    "I would assume it's just a little bit of consolidation after these gains, with the dollar holding back what perhaps could have been a little bit stronger a market," said Tom Hartman, broker with Altavest Worldwide Trading in Mission Viejo, California.

    Copper for July delivery on the New York Mercantile Exchange's COMEX division eked out a 0.15 cent gain by the close to $2.3670 a lb. Earlier, the contract jumped to a new eight-month high of $2.3955.

    After breaking out of a six-day consolidation range on Tuesday, Altavest's Hartman said the market had the technical momentum to take another stab closer to the $2.50 range.

    On the London Metal Exchange (LME), copper for three-months delivery ended up $10 at $5,180 a tonne, after soaring earlier to a session peak of $5,264, its highest price level since mid-October.

    "Copper has been up and down ... a bit of a roller coaster ride," said Michael Khosrowpour, an analyst at Triland Metals in London. "There is definitely a lot of funds behind the recent push ... it's an added propeller when you see a weaker dollar."

    "People seem to be acting a lot on short-term (economic) sentiment, yes there is good news out there (but) there still is a lot of bad news."

    Copper has gained 8 percent this month as recent improvement in economic data has helped lift the demand outlook.

    Data last week showed U.S. manufacturing shrank at a slower-than-expected rate in May, while in China industrial activity expanded on the month.

    Aluminum closed at $1,645 a tonne from $1,664, having hit a session high of $1,701, its highest since Dec. 2.

    Stocks of aluminum in LME warehouses fell 3,225 tonnes, just below a record near 4.3 million tonnes.

    Turmoil in the autos sector has hammered aluminum, and stocks have hit record highs this year on waning demand for the metal used in transport and packaging.

    But analysts warned the outlook for aluminum remained weak as a potential economic recovery would likely be slow and drawn out and a series of possible production restarts loom in China.

    IMPROVING ECONOMIC SENTIMENT

    Growing optimism over the global economy has been reflected in recent data showing U.S. manufacturing contracted at a slower-than-expected rate in May, while in China industrial activity expanded on the month.

    Consumer prices in China, the world's top copper consumer, fell in the year to May for the fourth month in a row, but at a slightly more moderate pace, reassuring economists who play down the risk that deflation could take root.

    "People are getting more and more positive on the economic outlook," said Gayle Berry, analyst at Barclays Capital.

    "But my concern is that this strength in prices is above where the fundamentals are. If we start seeing some disappointing economic numbers then this strength could very quickly be reversed."

    In other industrial metals, zinc rose to $1,625 from $1,605. It earlier hit $1,650, its highest since Oct. 2.

    Lead closed at $1,751 from $1,730. It hit a session high of $1,782, its highest since early October.

    "The commodities market is, in our view, overheated and the majority of positive developments have already been sufficiently priced in," said Commerzbank analysts in a note. "However, given its immense price momentum, the upward trend is likely to continue for the short term."

    Tin ended at $15,750 from $15,775. It also hit an eight-month high of $15,870. Nickel fell to $14,905 from $15,000, and also hit its highest since early October, at $15,690.

    (Source: Reuters)