METALS-LME copper pares losses; equities support

* LME copper pares early losses, Shanghai equities, datalift * ShFE copper up 0.3 pct, LME down 2.1; fund money supports * Lead rallies on new China supply problems * Too early to say if W-shaped recovery avoided By Nick Trevethan SINGAPORE, Sept 1 (Reuters) - London copper futures fell 2percent on Tuesday after a bank holiday weekend, but Shanghaiedged higher following the previous session's 3 percent slideas worries set off by China's equity markets subsided. Of London metals, only lead MPB3 traded higher, up $18 at$2,125 a tonne after China's Yunnan province said it wasinvestigating possible lead poisoning in its capital, Kunming,and smelter officials in its top lead producing city, Gejiu,are worried the provincial government may close up to half amillion tonnes of annual capacity, in the latest in a series oflead poisoning cases in China. Hunan, the second-biggest lead producing province in China,had shut some small lead smelters during last month's checks, alocal environmental official said on Tuesday, but did not sayhow many smelters were closed. [ID:nPEK84712] Shanghai's benchmark index .SSEC fell almost 7 percent toa three-month closing low on Monday, reinforcing fears aboutChina's ability to lead an economic recovery and dentingsentiment across commodities. [ID:nBJD002975] But on Tuesday the market stabilised, trading 0.6 percenthigher, lifted by positive purchasing manager data. London Metal Exchange copper for delivery in three monthsMCU3 fell $132 a tonne to $6,340 by 0708 GMT, after a 3percent slide in Shanghai metal and a 4.2 percent decline inCOMEX copper. HGZ9 LME copper dipped to $6,255 at the open. The discount for Shanghai copper rose to around 1,200 yuan,account for China's VAT versus the benchmark London contract,double last week's low, dashing hopes that the arbitrage windowwould reopen. Shanghai's benchmark third month contract SCFc3 rose 0.3percent to 49,490 yuan, and the most active December contractSCFc4 added 0.2 percent to close at 49,390 yuan. "The Chinese equity market is holding up, relieving some ofthe market's recent concerns. The Chinese PMI number alsolooked reasonably positive and is helping put a bottom undermetals," said David Moore, commodities strategist atCommonwealth Bank. He said current prices looked a little high given theeconomic recovery, but also agreed that fresh fund inflows werepossible in the early part of the new month, especially if theU.S. data came in at, or above, expectations. "If that is the case, it's further evidence the bottom haspassed, but it's still far too early to say whether we haveavoided a W-shaped recovery." China's official purchasing managers' index (PMI) forAugust rose to 54.0 from 53.3 in July, the China Federation ofLogistics and Purchasing (CFLP) said. It was the sixth straightmonth that the official PMI has stood above the boom-bust lineof 50. [ID:nBJC000453] But HSBC's China Purchasing Managers' Index (PMI) showed abigger rise in August, to a 16-month high of 55.1, from 52.8 inJuly, as a jump in both output and new orders underscored signsof a recovery. [ID:nBJB000652] More PMI data from the Euro zone, forecast at 47.9 due at0358 GMT will also be closely watched, as well as a raft ofU.S. data on housing, retail and auto sales. ECON Chile said on Monday copper prices could average $2.13 perlb ($4,696 a tonne) between 2010 and 2019, based on estimatesfrom a an expert panel used to help draft next year's nationalbudget bill. Prices in the past ten years have averaged $3,752 a tonneor $1.70 per lb. LME aluminium MAL3 fell $25 or 1.3 percent to $1,870. Technically, analysts said aluminium was trading nearsupport level at $1,850 and the lightweight metal was seen in aband capped at $2,000. "Upside resistance is near $2,000... Look for reboundactivity and the development of a trading band consolidationbetween $1,850 and $2,000," said Daryl Guppy, managing directorof Guppytraders.com. Base metals prices at 0708 GMT Metal Last Change Pct Move End 2008 Pct chg 09 LME Cu 6340.00 -135.00 -2.08 3060.00 107.19 SHFE Cu* 49490.00 130.00 +0.26 23840.00 107.59 LME Alum 1875.00 -25.00 -1.32 1535.00 22.15 SHFE Alum* 14940.00 45.00 +0.30 11540.00 29.46 COMEX Cu** 286.80 6.00 +2.14 139.50 105.59 LME Zinc 1849.00 -32.00 -1.70 1208.00 53.06 SHFE Zinc 14995.00 110.00 +0.74 10120.00 48.17 LME Nickel 18980.00 -50.00 -0.26 11700.00 62.22 LME Lead 2125.00 18.00 +0.85 999.00 112.71 LME Tin 13945.00 -155.00 -1.10 10700.00 30.33 LME/Shanghai arb^ 1177 Dollar/yuan 6.8304 6.8328 ** 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 Clarence Fernandez)