METALS-London metals drop on weak China factory data

SHANGHAI, April 30 (Reuters) - Most London metals fell on Wednesday, and logged a monthly decline, as disappointing Chinese factory activity data eclipsed optimism over improving U.S.-China trade ties, with investors eyeing upcoming U.S. economic data for clues into the Federal Reserve's policy direction.

China's official purchasing managers' index fell to 49.0 in April versus 50.5 in March, according to the National Bureau of Statistics on Wednesday, the lowest reading since December 2023, suggesting that domestic demand remains weak as factory owners struggle to find alternative buyers overseas amidst U.S.-China trade dispute.

Benchmark copper CMCU3 on the London Metal Exchange (LME) fell 2.3% to $9,227.5 a metric ton as of 0829 GMT, losing 4.9% from the closing price of $9,710 a ton on March 31.

Investors are awaiting the release of the U.S. Personal Consumption Expenditures (PCE) data this week, a closely watched inflation gauge that could impact Federal Reserve policy and metal prices.

U.S. President Donald Trump signed a pair of orders to reduce the impact of his auto tariffs, following Treasury Secretary Bessent's remark that some key U.S. trading partners have presented promising proposals to avoid tariffs.

Bessent also noted that China's recent exemption of select U.S. products from retaliatory tariffs showed a willingness to de-escalate.

"The disappointing PMI data clearly indicates that the trade war tensions are taking a toll on economic health, raising concerns about a potential global recession that could significantly reduce metals demand," a trader said.

In other London metals, aluminium CMAL3 fell 1.2% to $2,435 a ton, zinc CMZN3 lost 0.9% to $2,624, lead CMPB3 eased 0.7% to $1,964, tin CMSN3 dipped 0.3% to $31,815 and nickel CMNI3 rose 0.1% to $15,560 a ton.

The most-traded copper contract on the Shanghai Futures Exchange declined 0.5% to 77,220 yuan ($10,627) per ton.

Shanghai copper prices were supported by a massive drop in inventories CU-STX-SGH in warehouses monitored by the SHFE, which dropped 32% week-on-week to 116,753 tons as of April 25.

SHFE aluminium SAFcv1 lost 0.1% to 19,910 yuan a ton, zinc SZNcv1 slid 0.4% to 22,400 yuan, lead SPBcv1 fell 0.6% to 16,840 yuan, nickel SNIcv1 lost 0.6% to 123,720 yuan and tin SSNcv1 dipped 0.4% to 260,300 yuan.

($1 = 7.2660 Chinese yuan renminbi)

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