Metalnewsnet 3 Feb:

 Shanghai copper gave up early
gains and closed slightly lower on Tuesday, the fourth straight
loss, in the face of softer prices in London and ahead of key
U.S. economic data at the end of the week. London copper had snapped a four-day losing streak on
Monday after data showed the U.S. manufacturing sector grew in
January at a faster rate than expected, with the index reading
at its highest since August 2004. [ID:nN01363414]
[ID:nTOE61003S] But worries that January U.S. payroll data on Friday may
disappoint and fears of tighter Chinese interest rate policy
saw prices down again, albeit modestly. "The data is very strong -- the U.S. ISM numbers were very
positive. But overhanging the market is this fear of Chinese
tightening," said Ben Westmore, commodities economist at
National Australia Bank. "I think the market has priced in too heavily those
concerns. Growth remains the primary goal of the People's
Bank... and this tinkering with monetary policy will not have a
large effect on growth in the next years." Three-month copper on the London Metal Exchange CMCU3
dipped $30 to $6,761 a tonne by 0424 GMT, reversing early gains
which saw the market top out at $6,840, but prices remain well
above the previous session's 2-½   month low of $6,600. Benchmark third-month Shanghai copper SCFc3 fell 100 yuan
to 54,280 yuan, while the arbitrage between the two markets
narrowed to 278 yuan. "Base metals are set for a mild revival after heavy selling
in the past two weeks," ANZ's Mark Pervan said in a note. "We think the risk aversion associated with recent cooling
initiatives in China is overdone and participants will be keen
to buy on the dip on what is still likely to be a very strong
China demand story in 2010." LUNAR EFFECT Traders said the Lunar New Year, which starts Feb. 14 and
will keep Chinese markets shut for a week, has led investors to
scale back bets on the market. Open interest across Shanghai copper plateaued at around
386,000 lots between Jan. 22 and Jan. 29, its highest since
August, but has since fallen to 362,000 lots. For a graphic showing Shanghai copper open interest,
click:
 here "It's not surprising (open interest) is down. We've been
out of the market since the middle of last week. It's just too
volatile," a trader in Shanghai said. "After the new year, we should get a clearer picture of
what's happening and the rest of the world will have had time
to make a call on China rate policy, then we'll get in again.
Right now it's too risky." In other metals, nickel CMNI3 fell $10 to $17,990.
Nickel, down 2.9 percent so far this year is the complex's
strongest performer, but support from industrial action in
Canada may now fade with the aversion of a strike at a large
Canadian nickel operation. Anglo-Swiss miner Xstrata Plc
(XTA.L: Quote, Profile, Research) reached a tentative deal with unionised workers at its
Canadian nickel mining operations in Sudbury, Ontario, on
Monday, averting a strike that would have all but shut down
base metals production in the Sudbury region. [ID:nN01179992] The agreement was reached in the shadow of a strike by more
than 3,000 workers at Brazilian miner Vale's (VALE5.SA: Quote, Profile, Research) Sudbury
nickel and copper operations, and smaller strikes at Vale's
Voisey's Bay mine in Eastern Canada and at its Port Colborne,
Ontario, processing operations. The Vale Sudbury strike is now in its seventh month, with
no signs that bargaining will restart any time soon. Some
analysts have speculated a deal at Xstrata could spur Vale and
the United Steelworkers union to restart talks.
[ID:nN01179992]
 Base metals prices at 0724 GMT
 Metal         Last       Change   Pct Move  End 2009 YTD pct
chg
 LME Cu        6761.00    -30.00     -0.44    7375.00   
-8.33
 SHFE Cu*     54280.00   -100.00     -0.18   59900.00   
-9.38
 LME Alum      2090.00      5.00     +0.24    2230.00   
-6.28
 SHFE Alum*   16215.00     25.00     +0.15   17160.00   
-5.51
 COMEX Cu**     307.85      3.25     +1.07     332.75   
-7.48
 LME Zinc      2115.50    -29.50     -1.38    2560.00  
-17.36
 SHFE Zinc    17155.00    -85.00     -0.49   21195.00  
-19.06
 LME Nickel   17990.00    -10.00     -0.06   18525.00   
-2.89
 LME Lead      2052.00      7.00     +0.34    2432.00  
-15.63
 LME Tin      16200.00     50.00     +0.31   16950.00   
-4.42
 LME/Shanghai arb^          -278
 Dollar/yuan          6.8267 \ 6.8277
 ** 1st contract month for COMEX copper
  * 3rd contact month for SHFE aluminium, copper and zinc
  ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
 (Editing by Ed Lane)

(From Reuters) -