Copper futures in New York climbed at the open on Friday on stock drawdowns and a retreating dollar, but lingering concerns over slowing economic growth will likely keep any rally in check, dealers said.

Copper for December delivery was up 1.35 cents at $3.4450 a lb by 10:35 a.m. EDT (1435 GMT) on the New York Mercantile Exchange's COMEX division. Trading ranged from $3.4050 to $3.4950.

"The locals went long at the open, running up to the highs, but it looks like there is some stiff sales pressure near the top of this range that we are having difficulty with," said one COMEX floor dealer, citing the $3.50 (a lb) level as being a key level for the market to breach.

Spot September rose 2.30 cents to its early low at $3.4450.

COMEX copper volume at 10:00 a.m. was estimated at 3,000 lots.

Copper futures in New York advanced at the open on Thursday on further chart-based buying, following the market's test of and reversal from key support on Wednesday, sources said.

"All it is doing really is reversing its trend downward from that recent top at $3.6945 (a lb.) on Sept. 7. I think we kind of just broke out of that little down-trend channel," said one broker at a futures commission merchant.

"I think we're still in a bull market. We have had plenty of opportunities to break down ... just look at yesterday. We made a new recent low for two weeks and we came right back up and settled a little higher, and I think that is exhibiting strength," he added.

By 10:31 a.m. EDT (1431 GMT), copper for December delivery was up 0.90 cent at $3.3850 a lb. on the New York Mercantile Exchange's COMEX division, moving between $3.3345 and $3.4195.

Traders pegged initial support in December copper at $3.30, followed by the Wednesday low at $3.2550. Resistance continued to be eyed at $3.50, and then at around $3.66.

"We're still in this same range that we have seen for the last almost three months, but I think we kind of defined the lower end of the range, given yesterday's bounce," said one.

Spot September eased 0.50 cent to $3.3650, dealing from $3.3470 to $3.40.

Volume at 10 a.m. was estimated at 5,000 lots.

The recent sell-off in the energy markets has been one of the main factors in copper's decline from the early September highs, analysts said.

"We still would maintain that, barring a bounce in energy prices, the lower drift in energy makes copper vulnerable, and we would be reluctant to go long here, until the energy downdraft is fully exhausted or shows signs of terminating," Edward Meir, metals analyst at Man Financial, said in a daily market comment.

U.S. crude oil futures rose on Thursday, steadying near $61 in electronic trading, after dropping to their lowest level in six months on Wednesday amid brimming U.S. fuel stocks.

On the production front, the owner of the Spence copper project in Chile, Anglo-Australian mining giant BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research), and union workers said on Wednesday they thought labor mediators could help them reach an agreement and avoid a strike. If the two sides are not able to come to an agreement by Sept. 25, a strike will begin on Sept. 26.

Earlier in the week, a mediator was called in to help Teck Cominco Ltd. (TCKb.TO: Quote, Profile, Research) and unionized workers at its Highland Valley copper mine in British Columbia reach a new labor contract.

Meanwhile, London Metal Exchange-monitored warehouse stocks decreased by 600 tonnes to 123,325 tonnes on Thursday, while COMEX stocks rose by 568 short tons to 18,091 tons in Wednesday's daily report.

LME three-months copper was at $7,435 a tonne, up $5 from Wednesday's kerb close.

Copper futures in New York were down 2 percent, but managed to bounce from 8-1/2-week lows in early trade on Wednesday, as the ongoing weakness in commodities prompted more long-liquidation, sources said.

"The tumult in the energy markets is undoubtedly casting a shadow on metals, as the steep decline of the past few days is most likely inducing many funds to raise capital by paring back length across the board," said Edward Meir, metals analyst with Man Financial.

By 10:30 a.m. EDT (1430 GMT), copper for December delivery was off 6.15 cents, or 1.8 percent, at $3.3140 a lb on the New York Mercantile Exchange's COMEX division, trading from $3.3860 to $3.2550, its weakest level since late July.

"I think the bargain hunters are out now after the collapse this morning," said a trader down at the floor of the exchange.

Spot September slipped 8.55 cents at $3.29, dealing between $3.27 and $3.30.

COMEX copper volume at 9:00 a.m. was estimated at 3,000 lots.

"Over the last week, commodities have been under pressure...base metals tried to separate themselves, but any rally was sold into and the market is making lower lows each day, which is not a very good sign. But, I think these markets are overdone and some good value can be found here," said one COMEX dealer.

Copper furtures retook the negative road Tuesday on the Commodity Exchange (Comex), after the US government said the initial construction of homes fell to a three-month low in August, renewing speculation of a weaker demand for the red metal.

In Tuesday's session, the copper contract for delivery in December fell 3.9 cents, or 1.1 percent, to close at 3.3755 dollars per pound.

In London, the position of the red metal for delivery in three months lost 20 dollars, or 0.3 percent, to end at 7,430 dollars per metric ton.

The beginning of building homes during August in the United States plunged 6.0 percent, double the figure expected by analysts.

Experts said Tuesday on average, a houses uses about 400 pounds of copper.

Copper futures in New York opened down on Tuesday and steadied at lower levels after a sharp decline in U.S. housing starts weighed on sentiment and reinforced views that demand for industrial metals is on the decline, sources said.

However, the market garnered support from a softer dollar following an unexpected dip in U.S. core producer prices, which bolstered the view that the U.S. Federal Reserve will keep interest rates steady on Wednesday.

"I think the PPI numbers are a little offsetting to the housing data, in so much that it shows the economy is cooling and inflation seems to be in check," said one broker at a New York trading house.

By 10:37 a.m. EDT (1437 GMT), copper for December delivery was down 4.75 cents, or about 1.4 percent, at $3.3670 a lb on the New York Mercantile Exchange's COMEX division, just off the bottom of its early $3.3650-$3.4250 trading band.

Technicians continued to eye the $3.30 level as first support in December copper, while resistance was pegged at $3.50.

Spot September fell 3.80 cents to its morning low of $3.38.

COMEX copper volume at 9:00 a.m. was estimated at 2,000 lots.

Western Copper Corp. has agreed to acquire mineral exploration company Lumina Resources Corp. in a share-swap valued at about $26-million, Lumina announced Monday.

Lumina shareholders will receive one share of Western Copper for each Lumina share. The company said the transaction represents about a 66-per-cent premium to Lumina's closing price Friday of 72 cents on the Toronto Stock Exchange, and about a 63-per-cent premium to Lumina's 20-day average closing price. Western Copper's stock closed Friday at $1.20 on the TSX.

The boards of both companies unanimously approved the deal. The transaction is subject to completion of a definitive agreement, approval by Lumina shareholders and the Supreme Court of British Columbia, and receipt of regulatory approval. Lumina expects the transaction to close in late November or early December.

Officers and directors of Lumina, who together hold about 29.5 per cent of Lumina's stock, have entered lock-up and support agreements to vote in favour of the transaction. Lumina has also agreed to pay Western Copper a termination fee, equal to 3 per cent of Lumina's market capitalization, if the transaction is not completed because Lumina accepts a superior offer from a competing bidder.

Ross Beaty, Lumina's chairman, Ross Beaty, will become co-chairman of Western Copper following the transaction.

Western Copper's main holding is the Carmacks copper oxide project, about 200 kilometres north of Whitehorse, Yukon, which is currently undergoing a feasibility study. The company has targeted receipt of regulatory approval in the first quarter of 2007. Mine construction is targeted to begin during the second quarter of 2007.

Lumina owns the Casino copper-gold-molybdenum project in the Yukon, the Hushamu copper-gold project on north Vancouver Island and the Redstone copper-silver project in the Northwest Territories.

Prices of copper and gold will be stable and may even improve in the next 10 years, a top executive of an international corporate financing institution in General Santos recently said.

"Demand for copper will be on the upward. Times are certainly good for (the industry in) the next 10 years," said Mark Tyler head of the mining resources of Nedbank Captial Corporate Finance during a press conference here in General Santos City.Tyler arrived in the city together with ministers and technical consultants from African countries and they visited the Sagittarius Mines Inc. mineral development site in nearby Tampakan town of South Cotabato.

He added that the prevailing prices of copper and gold in the international market augur well for the Philippine mining industry.

Last week, prices of copper hit $3.40 per ounce while gold was well over $450 per ounce.

Even at the price of copper at $2 per ounce, Tyler added, the local mining industry could still generate enough profit.

"Especially if these are of world quality as in the case of Tampakan," the foreign executive said.

Prices of copper dropped to an all time low of US$0.17 in the late 80s, forcing several mining industries to collapse, among them Atlas Consolidated Mining Corporation, then the largest copper mine in Asia.

Based on the briefing given to the visiting African dignitaries and foreign financing institution, Tyler said the Tampakan copper and gold project could generate "well over US$2 billion" in revenues.

The Tampakan gold and copper project is owned by Sagittarius Mines Inc. through a financial technical assistance agreement (FTAA).

Sagittarius Mines Inc. is 40 percent owned by Indophil Resources Inc.

According to the 2004 annual report of Sagittarius, there are approximately 6.8 million tons of copper metal and 8.7 million ounces of gold in a 300-square kilometer project area.

The mineral resource is estimated to be worth US$23 billion, the annual report stressed.

However, the latest report indicated that copper and gold deposits in the area could breach the two billion ton mark.

The Tampakan project is reportedly the second largest in Southeast Asia.

Sagittarius is now winding up its pre-feasibility studies.

Company sources said actually exploration activities could start before 2010. of copper and gold will be stable and may even improve in the next 10 years, a top executive of an international corporate financing institution in General Santos recently said.

"Demand for copper will be on the upward. Times are certainly good for (the industry in) the next 10 years," said Mark Tyler head of the mining resources of Nedbank Captial Corporate Finance during a press conference here in General Santos City.

Copper futures in New York ended down on Friday, extending a weekly decline that saw the benchmark contract lose 7 percent of its value as investment money continued to bail out of commodities, sources said.

"It looks like there is just a complete abandonment of commodities right now," said one trader down on the floor of the exchange.

Copper for December delivery settled down 6.30 cents at $3.3115 a lb on the New York Mercantile Exchange's COMEX division, after dealing between $3.373 and $3.2750, its lowest level in one month.

"As soon as we broke through that $3.30 level, everybody was looking for a big gap down to $3.21, but we never made it, only reaching $3.2750, so when guys saw that it wasn't going lower, they started buying back their shorts," said one COMEX floor dealer.

Floor dealers saw the $3.30 level as key short-term support that could "make or break" the market.

"If we break through that level, I see no reason why we shouldn't be trading below $3.10," one said.

Spot September lost 6.55 cents at the close to $3.3165, while the rest of the board ended down 5.90 cents to 0.10 cent.

COMEX final copper volume was estimated at 14,000 lots, almost double that of Thursday's official count at 7,936 lots.

Concerns over the economic outlook in the United States weighed on bullish sentiment as a slowdown in U.S. growth was seen hurting demand for industrial metals.

On Thursday, the International Monetary Fund (IMF) said the global economy was set for another year of strong growth, but warned that rising inflationary pressures and a U.S. economic downturn posed growing dangers.

Reflecting the U.S. slowdown was a Federal Reserve report Friday that showed output at U.S. factories, mines and utilities fell unexpectedly by 0.1 percent in August against analyst expectations of a 0.2 percent rise.

However, tight inventory levels and possible supply disruptions in Chile and Canada continued to support the market.

Unionized workers at Teck Cominco Ltd.'s Highland Valley copper mine in British Columbia voted overwhelmingly in favor of a strike mandate, the union said on Friday.

Also, workers at Chile's Spence copper project, owned by Anglo-Australian mining giant BHP Billiton, said Thursday they will vote on strike action after the company failed to meet salary demands.

London Metal Exchange copper warehouse stocks fell 2,525 tonnes to 121,000 tonnes on Friday -- less than three days of global usage. COMEX stocks slipped 1,568 short tons to 14,180 tons in Thursday's daily report and stocks monitored by the Shanghai Futures Exchange fell 2,028 tonnes, or 4.3 percent, at 44,944 tonnes in the week ended Thursday.

Meanwhile, Chile's copper exports jumped more than 75 percent in August from a year earlier, to $2.92 billion, as prices for the metal remain high, according to central bank figures released on Friday.

China imported 40 percent less refined copper and alloyed in the first eight months of the year compared with a year earlier, but imports were expected to rebound in the next three months as fabricating plants increase export production before tax rebates fall.

LME benchmark copper closed down $150 at $7,270 a tonne from Thursday's kerb close.

Shanghai copper futures dropped
more than 1.5 percent to a two-week low on Friday, pressured
by
weakness in London Metal Exchange prices amid growing concerns
over the outlook for global economic growth.
 Both Shanghai metals futures and LME prices edged down as
falls in energy, gold and other commodities also hurt sentiment
for industrial metals, with traders closely watching the
outcome of a series of U.S. economic data due later in the day.
 The most active November Shanghai copper contract fell as
far as 67,840 yuan a tonne -- the lowest since August 31 --
before closing the morning session at 68,850 yuan.
 It was down 1,190 yuan, or 1.7 percent, from the previous
settlement of 70,040 yuan. It closed at 70,720 on Thursday.
 The technical trend weakened after falling below 70,000
yuan. The key Shanghai contract was down almost 10 percent from
last week's high of 75,200 yuan reached on September 7.
"Funds are shifting out from commodities in general and
base metals are no exception," said Naohiro Niimura, a vice
president at Mizuho Corporate Bank.
 Niimura said the market is focusing on U.S. economic data,
including consumer prices, to determine the outlook for copper
and other base metals.
 As of 0403 GMT, key three-month LME copper was trading at
$7,380/7,400 a tonne, down 0.5 percent from the London kerb
close of $7,420 on Thursday.
 Tokyo traders said end-users were detected buying around
Friday's low of around $7,300, but the market lacked energy to
post stronger gains as weak technicals have made funds
reluctant about building new positions in LME copper.
 Technical sentiment weakened, particularly after the
three-month LME contract decisively dipped below its 100-day
moving average (MA) earlier in the week for the first time
since June 2005.
 The 100-day MA, now around $7,570 on Friday, is becoming a
tough technical resistance.
 "It was significant after copper dropped below the 100-day
moving average, but I don't think copper will come under a
severe downtrend from here as there will be demand from
end-users," Mizuho's Niimura said.
 Weak energy prices also hurt sentiment for base metals.
Traders said investment funds are expected to be keen on
lightening their positions in base metals and other commodities
ahead of the end of the third quarter, with falls in energy
accelerating sell-offs in commodities.
U.S. crude oil futures were little changed above $63 a
barrel on Friday, after falling for the eighth time in nine
sessions a day earlier, as uncertainties over Iran's nuclear
row offset the impact of ample U.S. oil supplies.
 Shanghai copper and aluminium futures reacted little to
Thursday's news that China will reduce value-added tax rebates
granted to exports across a variety of sectors, including steel
and non-ferrous metals to 5, 8 or 11 percent from 13 percent.

Copper futures in New York advanced at the open on Wednesday, garnering some strength from the slight rebound in the energy and precious metals prices, sources said.

"More than anything else, we think the metal markets are becoming unhinged by the goings-on in the oil markets. In these times of intertwined markets and huge fund flows, we find the correlations between various markets to be very high, and when a critical market like energy starts selling off, there are bound to be ramifications on base metals, as funds pare positions and/or adjust margin requirements," said Edward Meir, metals analyst with Man Financial.

By 10:28 a.m, EDT (1428 GMT), copper for December delivery was up 0.75 cent at $3.3805 a lb on the New York Mercantile Exchange's COMEX division, ranging between $3.33 and $3.43.

Technicians pegged support in December copper at $3.3350, and then at $3.2650, while resistance was seen at the $3.50 level.

Spot September gained 3.95 cents at its morning peak at $3.43.

COMEX copper volume at 10:00 a.m. was estimated at a modest 3,000 lots.

"The volatility in this market continues to weigh on the upside. I think a lot of guys are scratching their heads, wondering where does it go from here," said one COMEX floor dealer.

Fundamentally, the copper market remains extremely tight, due to low warehouse inventories and the possibility of further supply disruptions due to upcoming contract renewals at major mines at year-end.

Talk of increased Chinese demand picking up in the fourth quarter of the year was another factor in propelling further price strength, traders said.

"It's still a very tight market and that still has room to get tighter, especially if China does come back in...and that is the wild card," said one.

Chinese industrial output for August grew 15.7 percent from a year earlier, compared with 16.7 percent in July, the National Bureau of Statistics said on Wednesday.

Meanwhile, world refined copper production exceeded consumption by 13,000 tonnes between January and June this year, against a deficit of 257,000 tonnes in the same year-ago period, the International Copper Study Group (ICSG) said in its latest monthly bulletin.

On the production front, Chile's Codelco, the world's largest copper company, reached a new, four-year wage deal with the supervisors union at its El Salvador division earlier in the week.

The successful deal, reached ahead of the Oct. 31 date for the contract to expire, is a positive start for state-owned Codelco, which faces much tougher negotiations at its two largest divisions, at Andina and Chuquicamata, Codelco Norte.

London Metal Exchange-monitored warehouse stocks rose 2,200 tonnes to 122,050 tonnes on Wednesday, while COMEX inventories rose 1,567 short tons to 14,897 tons in Tuesday's report.

LME copper for three month delivery last traded at $7,440.50 a tonne, down $119.50 from Tuesday's kerb close.

Copper futures in New York opened with modest gains on Tuesday on some light covering and bargain buying, but dealers cautioned the market could be hard-pressed to extend the gains given the heavy sell-off on Monday.

"I think in the next few days, you had better be careful if you're long because if we start holding below $3.40 a lb, it could do some damage to the chart," said one COMEX trader.

"On the decline, there is some interest in just buying it on the bounce, but beyond that, I would be very cautious ... just because of the wash-out we saw yesterday in the other metals," he added.

By 10:24 a.m. (1424 GMT), copper for December delivery edged up 1.75 cents a lb at $3.4350 on the New York Mercantile Exchange's COMEX division. Trading ranged from an early low of $3.3960 to $3.4550.

Floor dealers continued to place first support in December copper at the $3.40 level, and then at the Aug. 31 low at $3.32.

Spot September rose 2.60 cents to $3.46 a lb, just off its morning peak at $3.4650.

COMEX copper volume at 10 a.m. was estimated at a modest 3,000 lots.

Following the widespread liquidation in energy, metals, and agricultural commodities on Monday, markets stabilized in early trade on Tuesday, but some analysts believed prices still had the potential to work lower.

"A relatively steadier energy complex is helping the mood somewhat, but markets still seem nervous, and we think we could see a little more selling emerge after another day or so of sideways actions," said Edward Meir, metals analyst with Man Financial.

However, labor disputes and the possibility of further supply disruptions due to upcoming contract renewals at major mines should support the market at a time of critically tight supplies.

On Monday, Chile's Codelco, the world's largest copper company, reached a new, four-year wage deal with the supervisors union at its El Salvador division.

The successful deal, reached ahead of the Oct. 31 date for the contract to expire, is a positive start for state-owned Codelco, which faces much tougher negotiations at its two largest divisions, at Andina and Chuquicamata, Codelco Norte.

Meanwhile, China's imports of copper, including refined and semi-finished products, fell 23.7 percent from a year earlier to 1,340,839 tonnes in the first eight months of this year, preliminary customs data showed on Tuesday.

Looking at supplies, London Metal Exchange-monitored warehouse stocks fell 1,675 tonnes to 119,850 tonnes on Tuesday -- less than three days' worth of global consumption. COMEX inventories rose 1,372 short tons to 13,330 tons in Monday's report.

LME copper for three-month delivery last traded at $7,565 a tonne, up $85 from Monday's kerb close

Copper led declines in metals in London as signs of weakening global economic growth and easing tension over Iran's nuclear program prompted investors to sell commodities from oil to gold.

Industrial production in France, Europe's third-largest economy, unexpectedly fell in July, national statistics office Insee said today. Javier Solana, European Union foreign policy chief, said his meeting yesterday with Ali Larijani, Iran's top negotiator, was ``productive,'' easing concerns the country may halt oil exports.

``Demand growth for metals will moderate a bit just as supply starts to pick up quite nicely,'' David Thurtell, a metals analyst at BNP Paribas in London, said in an interview. ``Over the next year or so, I'm expecting softer prices.''

Copper for delivery in three months on the London Metal Exchange fell $190, or 2.4 percent, to $7,630 a metric ton as of 1:10 p.m. local time. Copper for December delivery on the Comex division of the New York Mercantile Exchange declined 3.4 percent to $3.4455 an ounce. The metal has gained 73 percent on the LME this year, trading at a record $8,800 on May 11.

Aluminum lost $82 to $2,555 a ton and nickel shed $200, or 0.7 percent, to $27,800 a ton. Lead slipped $15 to $1,320 and tin declined $95 to $9,055. Zinc was down $95, or 2.7 percent, at $3,405 a ton. Oil in New York fell 1.3 percent to $65.37 a barrel. Gold slid 2.3 percent to $596.95 an ounce.

French industrial production dropped 1.3 percent in July, compared with an expected 0.3 percent gain, based on the median forecast of 28 economists polled by Bloomberg News.

Global Slowdown

The Organization for Economic Cooperation and Development's composite leading economic indicator for 23 countries fell to 109.5 in July, the OECD said Sept. 8. That's the weakest measure since March and 0.3 point below June's level. Copper is used in construction and industries such as transportation and energy.

Investors are also concerned about a slowdown in home construction in the U.S., the world's second-largest user of copper. The National Association of Realtors, the U.S. industry's largest trade group, cut its forecast for 2006 sales last week, saying record home supply may erode prices for the first time in 13 years.

Housing accounts for 37 percent of U.S. copper demand, according to Citigroup Inc. A surge in construction last year contributed to a doubling of copper prices.

Declining metals prices pulled down mining stocks. Shares of BHP Billiton Ltd., the world's largest miner, dropped as much as 5.1 percent in London, the largest one-day decline since June 8. Anglo American Plc, the second-biggest, lost as much as 4.5 percent.

Inventory Decline

Losses in copper may be limited because stockpiles tracked by the LME are equal to less than three days of global consumption. Inventory monitored by the LME dropped 3,625 tons, or 2.9 percent, to 121,525 tons, the exchange said today in a daily report. That's the largest one-day decline since June 20.

Since copper, zinc and aluminum traded at records on May 11, LME-traded metals have slumped 7.7 percent, based on the LMEX Index. That's less than the 12 percent drop in the Reuters/Jefferies CRB Commodity Price Index of 19 commodities including energy and agricultural products over the same period.

``We mustn't get alarmed by a little liquidation that is going on,'' Philip Manduca, who helps manage about $500 million in assets at Titanium Capital, said today in an interview in London. Demand from China will boost commodities including copper, where supply remains limited, he said.

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.

Base metals futures gave up some of the gains made in the past two days of heavy buying by investment funds.

Copper in particular edged lower but would be supported by tight supply after a period of disruption in Chile, the world's biggest source of the metal.

"Copper had its move a couple of days ago. All the volume was on aluminium this morning," one London Metal Exchange floor trader said.

"The tone in copper is still bullish, though. We think there might be a bit more fund buying to come."

At midday three-months copper traded at $7,961 a tonne, down $79 from Wednesday's close and off an earlier peak of $8,110 per tonne.

"There isn't a lot of copper around and that's why the price keeps going up," another trader said.

Aluminium was $32 higher at $2,663.

Copper futures in New York rebounded from an early bout of profit-taking on Wednesday, extending the prior day's 4.7 percent rally after a better-than-expected reading of the ISM's non-manufacturing index, sources said.

"The macro players in the market are now reassessing their bearish bets. They are reassessing the full-blown panic they experienced back in May and they are starting to put some positions back in," said one dealer at a New York trading house.

By 10:37 a.m. EDT (1437 GMT), copper for December delivery gained 3.05 cents at its early high at $3.6550 a lb on the New York Mercantile Exchange's COMEX division.

Traders pegged first support at the $3.60 level, while initial resistance was seen at around the Aug. 10 high, near $3.70.

Spot September climbed 2.90 cents at $3.68 a lb.

COMEX copper volume at 10 a.m. EDT was estimated at 3,000 lots.

The Institute for Supply Management said its monthly non-manufacturing index, which measures the services sector of the economy, rose to 57.0 in August from 54.8 in July and above market expectations of 55.

A number above 50 indicates growth, while anything below 50 denotes contraction.

On Tuesday, COMEX copper futures rallied to a 3-1/2-week peak on a wave of new allocation of investment fund money at the start of September. Talk of a strengthening background of supply/demand fundamentals was also seen adding to the gains, traders said.

"For the base metals complex as a whole, further upside is expected as physical demand returns against a background of low stocks and tight supply," said John Reade, metals analyst with investment bank UBS.

High global copper cathode demand is likely in the near future, with China likely to increase imports, Norddeutsche Affinerie, Europe's largest copper producer, said on Tuesday.

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

"Should labor disputes follow ... this would again sharpen the supply situation in the market and again cause a price rise," the copper producer said in the report.

Meanwhile, the 25-day strike at Escondida, the world's largest copper mine, and a rockslide at another mine will have just a marginal impact on Chile's 2006 copper production, a top government copper official said on Tuesday.

Eduardo Titelman, executive vice-president of the Chilean Copper Commission (Cochilco), said he was maintaining his copper production outlook for the year, although a full study has yet to be done on the supply disruptions.[nN05389343]

Looking at supply, copper stocks at London Metal Exchange (LME) warehouses held steady at 128,275 tonnes on Wednesday, while COMEX inventories fell 246 short tons to 11,542 tons in Tuesday's report.

LME copper for three-month delivery last traded at $8,040 a tonne, up $120 from Tuesday's kerb close.

Copper jumped more than 5 percent in New York, while zinc and nickel prices gained in London on metals demand from investment funds. Gold and silver also gained.

``We've got the return of the funds,'' said Robin Bhar, an analyst in London at UBS AG. ``They've been loaded up with cash from investors.''

The price of copper reached a record in May, partly on demand from pension systems and mutual funds seeking returns unavailable in the stock and bond markets. Commodity-linked mutual funds are growing by about $500 million a month in the U.S., according to Matthew Schwab, managing director at American International Group Inc.'s financial products unit in Wilton, Connecticut.

Copper futures for December delivery gained 18.4 cents, or 5.3 percent, to $3.645 a pound at 9:14 a.m. on the Comex division of the New York Mercantile Exchange. Prices reached $4.04, the highest ever, on May 11.

Copper for delivery in three months rose $360, or 4.7 percent, to $8,010 a metric ton on the London Metal Exchange. The metal breached $8,000 for the first time since Aug. 11. Prices have more than doubled in the past year.

Zinc rose $170, or 4.9 percent, to $3,645 a ton on the LME. Nickel gained $1,000, or 3.6 percent, to $28,600 a ton. Gold and silver both gained 2.1 percent in New York.

Copper also climbed on speculation supply won't keep pace with growing demand as manufacturers increase consumption after a summer lull.

``Industrial activity picks up because you have vacation shutdowns,'' said Bhar. ``They will now start to gear up.''

While global copper stockpiles climbed 23 percent to 189,462 tons since the end of July, inventories remain ``seasonally low,'' said John Meyer, an analyst at London-based Numis Securities Ltd.

Chilean Copper

Workers at Escondida, the world's biggest copper mine in Chile, returned to work Sept. 2 after a strike that lasted almost four weeks and halved production. Wage negotiations later this year at mines including Chile's state-owned Codelco may help to keep prices high, Meyer said.

``Demand is the key to the current market, with the potential supply disruption being the catalyst to continuing high prices,'' Meyer said. ``The supply deficit looks likely to continue for the next six to 12 months.''

Metals had dropped from records, partly on concern that rising global interest rates may slow economic growth and curb demand for. China, the world's biggest copper consumer, on Aug. 18 raised its key rate in an effort to rein in growth. The economy grew 11 percent in the second quarter, the most in more than a decade.

Still, ``you won't see a slowdown overnight'' because global economic growth remains strong, Bahr of UBS said.

`Another Rally'

``There are all the ingredients for another rally in prices,'' Bhar said. ``Strong fundamentals are offsetting any worries about growth.''

Zinc stockpiles monitored by the LME have dropped 57 percent this year, while nickel inventories have fallen 84 percent.

``Zinc has the strong fundamentals,'' and nickel ``has got rapidly dwindling stocks,'' Bhar said.

Gold futures for December delivery rose $13 to $645.60 an ounce on Comex. Silver for December gained 27 cents to $13.35 an ounce.

Titanium Resources Group Ltd said its interim losses have narrowed substantially after it recorded sales of 14.9 mln use during the period.

In the six months to June 30, net losses narrowed to 5.2 mln usd from 13.6 mln previously.

Chief Executive Len Comerford said: 'We are now focusing on expanding operations and reducing costs through production efficiencies. The outlook is extremely good.'

A booming aerospace industry is bringing bad news to cycling enthusiasts by sparking higher prices for fancy bikes.

Airplanes and high-end bicycles are made of specialty materials such as titanium and carbon fiber, which have risen in price because of soaring demand. This means bike makers -- along with makers of sailboats, lacrosse sticks, tennis rackets, jewelry and bone screws -- are paying 25 percent more for raw materials and passing along costs to consumers. Makers of titanium golf clubs are refraining from raising prices since their markups were already high before the specialty-materials crunch.



Amid rising demand, titanium and carbon-fiber makers are largely catering to their bigger customers: the aerospace industry. Zsolt Rumy, chief executive of St. Louis-based Carbon Fiber maker Zoltek Companies Inc., says he is trying to keep prices lower for bigger customers by raising prices for smaller ones, such as bike and golf-club makers, who constitute 15 percent of his company's business. "We really jack up the price" for smaller customers, he says. He's passed on more of the 60 percent to 100 percent increases to sporting-goods customers.

Meanwhile, the three domestic titanium makers -- Allegheny Technologies Inc. in Pittsburgh, RTI International Metals Inc. in Niles, Ohio, and Titanium Metals Corp. in Denver, Colo. -- are planning expansions of raw-materials and titanium production -- but they don't want to ramp up too much and too fast, in case there is a collapse in the aerospace market.

"Markets climbed so rapidly, they outpaced our ability to produce," says Robert Borowski, director of global procurement at Titanium Metals, which sells 95 percent of its titanium to aerospace, industrial and military companies and less than 5 percent to sporting-goods and jewelry makers.

Copper prices made modest gains Friday despite the conclusion of a miners' strike in Chile, as traders squared positions ahead of the three-day Labor Day weekend.

A decline in prices earlier in the day was blamed largely on profit-taking, traders said.

December copper settled up 0.50 cent to settle at $3.4610 per pound on the New York Mercantile Exchange.

Settlement of the 25-day strike at Chile's Escondida, the world's largest copper mine, had little effect on closing prices.

Escondida workers received a 40-month contract offer that included a 5 percent wage increase, an end-of-conflict bonus, an interest-free loan, as well as additional benefits including education, housing and health care.

Gold and silver futures finished slightly mixed after early weakness. Some of the bounce was linked to a reluctance to be short ahead of a three-day Labor Day weekend, due to some of the ongoing tensions in the Middle East. But some was also linked to the recovery in the euro against the dollar, after early euro weakness was blamed for gold's and silver's initial declines.

December gold settled $1.60 lower to $632.60 a troy ounce, up from a low of $628.

December silver managed to finish up 4 cents to $13.07 after an earlier low of $12.825.

October platinum rose $3.60 to $1,254.80 an ounce.

December palladium gained 90 cents to $349.60.

Mitsui & Co. and Nippon Mining Holdings Inc. said Friday they will sell part of their shareholdings in Toho Titanium Co. in a public offering.

The two companies said in separate statements that their decisions follow a request by Toho Titanium, which wants to increase its shares' liquidity in the stock market after having been promoted to the Tokyo Stock Exchange's First Section from the Second Section on Friday.

Mitsui and Nippon Mining said they haven't set the sale price, but the market value of the shares they plan to sell is more than Y30 billion, based on the Toho Titanium's closing price Friday of Y7,300 on the TSE.

Mitsui said it will sell 2.3 million Toho Titanium shares through two underwriters, Nikko Citigroup and Daiwa Securities SMBC. Mitsui's stake in Toho Titanium will decline to 11.6% from 15.4% after the sale, it said.

Nippon Mining said it will sell up to 2.4 million Toho Titanium shares through Nikko Citigroup. It plans to sell 2 million shares of the titanium refiner and may sell an additional 400,000 shares depending on investor demand, it said.

If Nippon Mining sells 2.4 million shares, its stake in Toho Titanium will decline to 33.6% from 37.5%.