METALS-Copper down on poor demand prospects, firm dollar

LONDON, March 4 - Copper fell on Thursday as investors fretted demand was cooling in China and was still weak in the OECD, while dollar strength deterred non-U.S. investors.

Benchmark copper for three-month delivery <CMCU3> on the London Metal Exchange ended at $7,370 a tonne from $7,580 on Wednesday. It earlier fell nearly 3 percent to $7,367.

Copper has eked out gains of just 0.6 percent so far this year, with Chinese buying softening as the world's top base metals consumer moves to a less accommodative monetary policy to cool rapid growth. Chinese demand helped copper surge 140 percent in 2009. [ID:nTOE62301C]

Adding to investors' disappointment, Western demand is recovering slowly.

"There haven't been any particular signs of a very strong demand recovery in copper or other base metals outside China," said Daniel Major, analyst at RBS Global Banking and Markets.

"Economic data from the U.S. and Europe have been less than supportive in the last two or three weeks."

Underscoring these concerns, data on Thursday showed a fall in U.S. pending sales in January. New orders at U.S. factories rose 1.7 percent in January, in line with expectations. [ID:nN04154147] [ID:nN03257330]

Pressuring metals, the dollar rose versus the euro as comments by the European Central Bank reinforced expectations interest rates would stay low in the foreseeable future. [USD/]

Major said RBS expects the dollar to strengthen later in the year, and that this will put pressure on metals prices.

CHILE QUAKE

The fall in copper, used in power and construction, followed a five-week peak in prices on Monday after an earthquake forced top producer Chile to temporarily shut down nearly a quarter of its mine capacity.

For more on the Chile quake, see [ID:nN28135112] [ID:nCHILE] But supply concerns eased after key miners resumed output.

Codelco, [CODEL.UL], the world's top copper miner, said it was exporting normally after Saturday's quake. Anglo American <AAL.L> also resumed production. [ID:nN03242555] [ID:nWLB9145]

"Perhaps the market has feared that the damage caused by the earthquake in Chile last weekend was more severe than it turns out," said Peter Fertig, a consultant at Quantitative Commodity Research.

Copper reached $7,634 on Wednesday, its best since Jan. 11.

Traders also continue to keep a watchful eye on stock movements, for clues on demand outside China. The latest data showed stocks fell 6,350 tonnes to total 544,225 tonnes, remaining near six-year highs.

Aluminium <CMAL3> ended at $2,215 versus $2,210, steel-making ingredient nickel <CMNI3> closed at $22,300 from $22,845 and tin <CMSN3> at $17,250 from a last bid of $17,350 on Wednesday.

Tin earlier hit a one-month high of $17,850, while nickel touched $23,040, the highest June 2008.

Battery material lead <CMPB3> ended at $2,170 from $2,238.50 and zinc <CMZN3> at $2,259 a tonne from $2,320.

For results from miner Kazakhmys, see [ID:nLDE6220M2]. (Additional reporting by Pratima Desai; Editing by James Jukwey)