Copper steadies as Chinese stocks calm

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    Copper has steadied after the stock market in China recovered for a second day, but continued worries about oversupply weighed on the market.

    "The sentiment out there is still positive and that's keeping copper up today," said a Perth-based commodities trader.

    A surge in Chinese equities on Friday boosted metals as signs of fresh support from Beijing prompted more bargain hunting following an earlier plunge that panicked global markets.

    Benchmark copper on the London Metal Exchange closed barely changed, down 0.1 per cent at $US5,135 a tonne, after lurching up and down during the day. LME copper ended August with a monthly loss of about two per cent ahead of Monday's UK market holiday.

    Copper shot up 4.2 per cent on Thursday, its biggest one-day percentage gain since May 2013. It was lifted by a bounce in global stock markets, buoyant US economic data and the announcement of production cuts by miner Freeport-McMoran Inc.

    Freeport lowered its copper sales estimates for 2016 and 2017 by about 150 million pounds.

    "You wake up this morning (after Thursday's rally) and you wonder how much has really changed in the world of copper. Ultimately, the Freeport production cuts are not huge, and it's also next year, not now," said Stephen Briggs, metals strategist, BNP Paribas.

    "They're the largest private sector copper producer in the world, so maybe the market is thinking is that all we're going to get? There's probably some disappointment setting it."

    Thursday's gain helped distance copper from six-year lows of $US4,855 plumbed this week on fears of a hard landing in China, which intensified after Beijing devalued the yuan earlier in August.

    The global copper market is expected to be in surplus by 477,000 tonnes this year, said Bruce Alway of GFMS, the metals research and forecast team at Thomson Reuters.

    Despite the slide in copper prices by nearly a fifth this year, miners' costs have also fallen, so major production cuts were not likely, he added.

    "Unless prices remain at this level for a sustained period, I don't see a huge risk of large scale closures," Alway told the Reuters Global Base Metals Forum.

    Zinc failed to trade in closing open outcry activity and was bid up 3.3 per cent at $US1,809 a tonne, building on its three per cent gain on Thursday, after Australian officials threatened to close the giant McArthur River zinc mine owned by Glencore.

    Lead climbed 3.2 per cent to end at $US1,732.50 a tonne and nickel added 0.2 per cent to $US10,075.

    Aluminium marched 2.8 per cent higher to close at $US1,603 a tonne and tin gained 2.6 per cent to $US14,250.

    Despite Friday's gains, tin still slid 13 per cent in August, its biggest monthly decline in over three years.

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