Mining Profits...Investing In Industrial Metals

Copper futures in New York settled lower on Friday as investors continued to book profits following the market's failure to build on the fund-led rally seen earlier in the week, sources said.

Spill-over selling from the precious metals markets added to the downside pressure, as investors were seen lightening up positions due to a resurgent U.S. dollar.

"The rally in the dollar certainly weighed on all the metals today," said one dealer.

Copper for December delivery ended down 8.00 cents a lb to $3.5680 on the New York Mercantile Exchange's COMEX division, after dealing between $3.5350 and $3.66.

Spot September lost 8.75 cents at $3.5780 a lb, just off the lower end of its $3.55-$3.6760 trading range.

COMEX floor dealers noted sell-stop orders were triggered when the market moved below the $3.60 a lb level, but as the selling began to dry, speculative players moved in and bought at the lows.

COMEX final copper volume was estimated at 8,000 lots, in line with Thursday's official count at 8,605 lots.

A return of new-month investment fund money boosted COMEX copper futures to their loftiest levels since Aug. 10 on Tuesday, but the failure to hold the gains prompted some to pull some money off the table.

"After several days of solid gains, we are seeing the flip-side of fund buying set in, namely, that in the absence of any compelling reason to push higher, fund money could switch gears, driving prices lower in a bout of profit-taking," said Edward Meir, metals analyst with Man Financial.

Large declines in exchange-monitored stock levels in London and China limited the losses Friday and reflected the market's tight supply/demand imbalance.

Copper stocks at London Metal Exchange (LME) warehouses declined 2,525 tonnes at 125,150 tonnes on Friday -- less than three days' worth of global consumption. Copper inventories in Shanghai fell by 1,221 tonnes, or 2.5 percent, to 46,972 for the week ended Thursday. COMEX inventories rose 145 short tons to 12,088 tons in Thursday's report.

Meanwhile, the world's largest copper mine, Chile's Escondida, is at 95 percent output and should be running at 100 percent Friday, after the mine emerged from a 25-day union strike over wages that saw production cut in half.

Chile, the world's largest copper producer, still faces contract negotiations for workers at state-owned Codelco.

LME copper for three-month delivery closed down $195 to $7,815 a tonne from $8,010 at Thursday's kerb close.