Weak sentiment hits copper prices

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    Copper prices have fallen as expectations of weak demand from top consumer China are fuelled by data showing its manufacturing sector contracting at its fastest pace in three years.

    Benchmark copper on the London Metal Exchange ended at $US5,067 a tonne, down 1.3 per cent from Friday's close. The metal used in power and construction hit a six-year low of $US4,855 last week.

    "Looking at fundamentals, China and demand, it's not looking terribly healthy," said Sergey Raevskiy, metals research analyst at SP Angel.

    China's official manufacturing Purchasing Managers' Index fell to 49.7 in August, from 50.0 in July.

    The new orders component, a proxy for domestic and foreign demand, fell to 49.7 in August from July's 49.9. New export orders contracted for an 11th straight month.

    Negative sentiment about China can be seen in its equity markets, which started September with losses, tumbling five per cent at one point.

    The markets appeared unimpressed by fresh stimulus measures that included a further relaxation in property investment rules, as well as policies to support mergers, acquisitions and share buybacks by listed companies.

    "Commodity prices have been buffeted by volatile swings in Chinese equity and FX markets, as well concerns regarding underlying growth and (the) policy response," Citi said in a note.

    Three-month aluminium ended unchanged at $US1,603 a tonne, lead was softer at $US1,729.5 from $US1,732.50 on Friday and zinc was bid at $US1,810 from $US1,809.

    Tin rose 3.0 per cent to $US14,675.

    "Tin appears to have broken the downtrend, there are two large holdings of warrants and cash contracts (30 to 40 per cent) and liquidity is still low. The funds don't need much more encouragement," a trader said.

    A tighter LME tin market has pushed up the premium for cash material over the three-month future to around $US400 a tonne, towards the six-year high at $US540 level seen on August 18.

    Nickel fell 3.2 per cent to $US9,750 a tonne on jitters over demand from Chinese stainless steel mills and rising stocks. The price has fallen more than 30 per cent since the start of the year.

    Stocks of nickel in LME-approved warehouses, at 453,894 tonnes, account for about three months of global consumption estimated at about 1.9 million tonnes for this year.

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