(18/04) METALS-Copper edges up, takes China move in its stride

April 18, 2011

Copper edged up on Monday as investors closed short positions after five straight days of price declines, outweighing concerns about China's raising banks' required reserves and the effect of a stronger dollar.

Copper for three-months delivery on the London Metal Exchange traded at $9,431 a tonne at 0915 GMT, up from a close of $9,405 a tonne on Friday.

China raised banks' reserve requirements on Sunday for the fourth time this year, extending the fight against excessive liquidity and stubbornly high inflation there. Chinese stocks rose to a five-month high as many investors had factored the much anticipated measure.
ut analysts said the monetary tightening also sent a positive signal as it showed the world's second-largest economy had its growth under control.

Stocks of copper in LME warehouses last rose 1,350 tonnes to 451,775 tonnes, their highest since June 2010. The majority of these inflows went into warehouses in Asia, supporting investors' concerns that Chinese demand is lacklustre. "People are still talking a lot about the high inventories in China for copper," Standard Chartered's Smith said.

The dollar strengthened against a basket of major currencies, softening metals demand from non-U.S. investors.

Also keeping sentiment in check, European equities fell as the crisis in the euro zone continued to dampen risk appetite.