Copper gains following production cuts

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    Copper prices are higher as production cuts by Glencore continued to boost base metals, but analysts warned the output shift may not be enough to offset weak demand growth in China.

    Benchmark copper on the London Metal Exchange closed 0.5 per cent up at $US5,315 a tonne, after nearing Friday's three-week high of $US5,356 in early trade.

    The metal rose more than three per cent in the previous session, swept higher in a broad metals rally triggered by news that Glencore will cut zinc output by 500,000 tonnes, or 4 per cent of global supply.

    "People are still pretty positive over the story with Glencore and some other supply-side cutbacks," said Mu Li, senior metals analyst at CPM Group. "The rally in prices is sort of an upward correction to the previous bearish sentiment."

    Copper prices have recently rebounded from six-year lows below $US5,000 touched in August, helped partially by production cuts.

    Glencore also said last month it was suspending some of its copper operations in the Democratic Republic of Congo and Zambia for 18 months, removing 400,000 tonnes of cathode from the market.

    Prices were also supported by shrinking inventories as stocks in LME-approved warehouses fell to a seven-month low of 303,200 tonnes, down 18 per cent from a peak in late August.

    But Li noted more fundamental support was needed to lift prices above levels seen in mid-September, when LME copper rose above $US5,400.

    Analysts also remained unconvinced that the dip in supply will offset slowing demand growth from China, which accounts for nearly half of global copper consumption.

    "Key figures in terms of Chinese growth are weak and we havent seen a turnaround yet," said Jens Pedersen, commodities analyst at Danske Bank.

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