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Copper falls after U.S. jobs data disappoints

Copper falls after U.S. jobs data disappoints

* Supply disruptions, stocks stem losses
* Spotlight on lead inventories
* US jobs barely rise, dashing hopes of revival

By Pratima Desai

LONDON, July 8 (Reuters) – Copper fell on Friday after data showed U.S. jobs
growth braked sharply in June, quashing hopes that the pace of the world’s
largest economy was quickening, but disruptions to supply of the metal helped
limit losses.

Benchmark copper on the London Metal Exchange closed at $9,661,
compared with $9,740 at Thursday’s close. Earlier, it hit $9,789.75, the highest
since April 12, helped by forecasts that the jobs numbers would reflect a hiring
spree in June.

Instead, nonfarm payrolls rose only 18,000, the weakest reading since
September, the Labor Department said on Friday, well below economists’
expectations for a 90,000 rise.

Many economists had raised their forecasts on Thursday after a
stronger-than-expected reading on U.S. private hiring from payrolls processor
ADP, and they expected gains of anywhere between 125,000 and 175,000.

“It’s a terrible number, there is no good news you can glean from it,” said
David Semmens, an economist at Standard Chartered in New York. “It shows the
labour market is still lagging improvements in the overall economy.”

Copper has taken some comfort this week from the perception that China’s
third rate hike this year would probably be the last in a series aimed at
reining in inflationary pressures.

“Weaker Chinese manufacturing data helped, it gave the market some
confidence that China wouldn’t continue tightening over the rest of the year
because we have now seen an impact on activity,” said Gayle Berry, analyst at
Barclays Capital.

China accounts for nearly 40 percent of global copper consumption estimated
at about 21 million tonnes this year.

Factory activity in China also grew at its slowest pace in 28 months in
June, data last week showed.

“Supply side disruptions are also helping copper … The copper supply side
is looking very weak this year and is vulnerable to these types of disruptions,”
Berry said.

In a move that will keep production shut at one of the world’s top copper
and gold mines, workers at Freeport Indonesia plan to extend a strike by
another week to July 18.

INVENTORY DYNAMICS

In Chile, the world’s top copper mine, Escondida, halted extraction
operations for a second day due to heavy rains on Friday, while workers at
Codelco’s top two operations, Chuquicamata and El Teniente, ratified plans to
strike for 24 hours next Monday.

“This poses an upside price risk for copper,” Credit Suisse Private Banking
said in a note. “LME inventory dynamics continue to point to strengthening end
use demand, which bodes well for metals prices.”

Stocks of copper in LME-registered warehouses at 461,850 tonnes are the
lowest since April 21 and down more than 3 percent since a year high of 477,925
tonnes on June 9.

Lead inventories at 308,300 tonnes, the lowest since late April, are also in
the spotlight and helping to support prices of the battery metal.

Three-month lead closed at $2,719 a tonne, from $2,720 a tonne at
the close on Thursday when it hit $2,730 a tonne, the highest since April 13.

“The world’s largest lead-only mine, Magellan isn’t going to be operating
this year at all, that is clearly price supportive,” Berry said.

Canadian miner Ivernia Inc said in April it was placing its
flagship Magellan lead mine in Australia under full care and maintenance for an
indefinite period.

“The concerns about the impact of the closures of the battery plants in
China have started to ease, we are seeing battery manufacturing plants restart,”
Berry said.

Aluminium , untraded at the close, was last bid at $2,535 a tonne
from Thursday’s last bid at $2,590. Zinc ended at $2,356 a tonne from
$2,412 on Thursday.

Traders said momentum buying pushed tin up to $27,650 a tonne, its
highest since June 1, and nickel to $24,299, the highest since May 19.

Tin closed at $26,800 a tonne from $27,540 at the close on Thursday and
nickel was $23,890 from $23,900.



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