Shanghai Copper up 0.2%, LME Drifts

SINGAPORE, July 2 -- Shanghai copper rose on Thursday and London futures held steady after sharp gains in the previous session ahead of fresh US jobs data that may confirm signs of economic recovery after positive manufacturing numbers.

    Data from the Institute for Supply Management showed manufacturing in the U.S shrank at a slower pace in June than in the previous month, and the upbeat purchasing managers' index (PMI) in China was also upbeat.

    The next item on the data radar is U.S. non-farm payrolls for June due later on Thursday, before the U.S. markets pause for the July 4 long weekend.

    Shanghai's benchmark third-month copper futures SCFc3 rose 0.2 percent to 40,420 yuan a tonne by midday, while the most- active October contract SCFV9 was flat at 40,400 yuan.

    "In the short term copper will maintain its bullish trend. The Chinese market is flooded with liquidity. This is true in equity and other markets," said Li Rong, an analyst with Great Wall Futures.

    "Metals prices are dominated by liquidity, not fundamentals."

    Volumes in Shanghai have been up around the million lot per day level in Shanghai since surging around June 22, compared with the average for the year of around 700,000 before then. Over the same period, prices have risen almost 10 percent.

    Copper for three-month delivery on the London Metal Exchange MCU3 ticked down $10 to $5,080, after hitting $5,187.50, its highest since June 15, in the previous session.

    "Turnover in LME is light, unlike Shanghai. Dollar weakness keeps coming back to support prices but we continue to top out around $5,150-$5,200. The more we see that, the stronger the resistance gets," an LME broker in Hong Kong said.

    "If the dollar weakens on the non-farm payrolls numbers tonight we could break higher, but most of the market is fairly cautious ahead of the U.S. long weekend."

    LME copper inventories fell again on Wednesday, down 225 tonnes to 265,725 tonnes, their lowest since mid-November. Stocks have fallen more than half since late February.

    LME aluminium inventories fell for the first time in the past week on Wednesday, down 3,525 tonnes, but still near a record high just below 4.4 million tonnes.

    Nickel MNI3 prices fell $300 to $16,150, shrugging off a minor supply disruption in Australia.

    For the second time in less than a month BHP Billiton Ltd (BHP.AX: Quote)(BLT.L: Quote) temporarily closed its Perseverance nickel mine in west Australia due to rock falls, the company said.

    (Source: Reuters)