Shanghai Copper Chases LME Gains, Poor Outlook Weighs

MANILA, July 14 -- Shanghai copper rose more than 1 percent on Tuesday, tracking advances in London in the previous session, although a still gloomy outlook for the global economy is likely to cap gains.

    FUNDAMENTALS

    * Shanghai copper for September delivery rose 460 yuan to 39,550 yuan ($5,791) a tonne by 0110 GMT, after having fallen 1 percent on Monday. The most-active October contract added 500 yuan to 39,400 yuan.

    * Three-month copper on the London Metal Exchange eased $10 to $4,885 a tonne.

    * Many analysts point to expectations of slowing Chinese demand as the main factor that could weigh on base metals prices in the short term but with the arbitrage window opening again, there is further room for large-scale Chinese buying.

    * An expected increase in U.S. car production in the current quarter would be another boost to global demand for base metals, Barclays Capital said in a note.

    * An increase of 1.5 million units in production of U.S. light vehicles would result in a nearly 1 percent rise in global demand levels of copper, zinc and lead in the third quarter, with a more significant 2.3 percent in aluminum, Barclays said.

    * Aluminum stocks at LME warehouses surged to a record above 4.4 million tonnes, underscoring weak demand for the metal used in transport and packaging.

    MARKETS NEWS

    * The dollar rose against the yen on Monday, rebounding from a five-month low, as positive comments from a bank analyst boosted hopes that earnings of U.S. financial firms might not be as weak as feared.

    * U.S. stocks rallied more than 2 percent on Monday on the bullish analyst comments on financial sector performance.

    * Oil prices slipped on Monday, briefly touching their lowest level in almost two months, on concerns over the state of the global economy.

    DATA/EVENTS

    * The following data and event are expected on Tuesday:

    - German ZEW July current conditions, economic sentiment survey (0900 GMT)

    - Euro zone May industrial production (0900 GMT)

    - U.S. June producer prices (1230 GMT)

    - U.S. June retail sales (1230 GMT)

    - U.S. Redbook weekly retail sales (1255 GMT)

    - U.S. Treasury Secretary Timothy Geithner visits S. Arabia.

    (Source: Reuters)