Copper heads for first weekly advance in four weeks before U.S. payrolls

Copper headed for the first weekly advance in four weeks in New York before a report that may indicate a strengthening U.S. economy, the second largest consumer of the metal world.

An increase in November payrolls probably pushed U.S. gains work beyond the 1 million mark for the year, economists said. Copper added 5.6 percent this week as reports showed stronger manufacturing in China, USA and Europe and inventory followed by the London Metal Exchange shrank during 41 weeks in a row.

"The market is just waiting ahead of U.S. payrolls today," said David Thurtell, analyst at Citigroup Inc. in London.

Copper for March delivery fell 0.4 cents, or 0.1 percent, to $ 3.975 a pound at 7:47 am on the Comex in New York. Copper for delivery in three months lost 0.1 percent to $ 8,710 a ton on the LME. The six main metals traded on the LME were removed, except nickel.

The payroll figures are due at 8:30 am New York. They show that employment rose by 150,000 last month, according to the median forecast of 87 economists surveyed by us, which gain so far this year to 1.02 million euros.

"Blue Skies"

"The report of the monthly nonfarm payroll in the U.S. will either confirm the optimism that positive economic reports have helped build this week, in which case it really is a blue sky at the end of the year, or disappointing figure cut the rally short, "said Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow. "Investors are, however, clearly in the mood for a strong finish for 2010."

Separate figures due at 10 am New York can show that service industries, representing almost 90 percent of the U.S. economy, grew last month at the fastest pace since May as more jobs and increased wages increased holiday sales.

Copper stocks in LME fell 0.9 percent this week to 353,625 tonnes. Are 30 percent this year, during the first annual decline since 2004. Actions monitored by the Shanghai Futures Exchange fell for the second consecutive week, the stock exchange said today.

premium immediate delivery of LME copper metal in three months fell for a second day, falling 8.3 percent to $ 50 per ton after reaching $ 74, the highest since October 2008, 1 December. Prices moved to 08 November at a backwardation call when near metal operations over the longer-term contracts, which could signal the concern of supply.

Loan Fee

Tightness in the copper market "greatly relieved" yesterday, Citigroup's Thurtell said.

The rate of borrowing copper for delivery next day, the spread called tom-next, was passed at a discount of $ 1.75, compared to the closing night $ 4 discount. An increase in the price indicates contraction in supply.

An unidentified group held between 50 percent and 79 percent of LME copper stocks on 22 November at least December 1, recent data show exchange. Another unidentified company held the same amount of nickel stocks in LME 1 December.

Wage talks with Anglo American Plc and Xstrata Plc Collahuasi mine in Chile are set to turn it into a fifth day as union representatives and the company try to end a strike at copper mine in the world's third largest, a union leader said yesterday. The strike entered its 28th day yesterday, the longest recorded in a major Chilean copper mine.

Tin for delivery in three months on the LME fell 0.6 percent to $ 25,400 a tonne. Prices reached a record $ 27,500 on 9 November. The metal has risen 50 percent this year, advances in the bag, after production was halted in Indonesia and the Democratic Republic of Congo.

Aluminium fell 0.2 percent to $ 2,343 a tonne and nickel remained at $ 23,650 per ton. Lead fell 0.3 percent to $ 2,367 a tonne and zinc fell 1.4 percent to $ 2,228 a tonne.