METALS-Copper steadies on softer dollar, hopes of Chinese stimulus after weak data

By Eric Onstad

LONDON, Aug 15 (Reuters) - Copper prices steadied on Friday as gloomy economic data from top metals consumer China was balanced by a weaker dollar and hopes the data would spur Beijing to unleash more stimulus.

Three-month copper CMCU3 on the London Metal Exchange was up 0.2% at $9,782 a metric ton at 1600 GMT, down from a two-week peak hit on Tuesday.

Data on Friday showed that China's factory output growth slumped to an eight-month low in July while retail sales slowed sharply.

The copper contract on the Shanghai Futures Exchange SCFcv1 eased 0.1% to 79,060 yuan ($11,008.23) a ton.

"In the context of base metals, these indicators suggest a subdued demand environment, likely weighing on metal consumption and prices amid concerns of a slowing Chinese economy," said Neil Welsh, head of metals at Britannia Global Markets.

Data from SHFE on Friday showed copper inventories rose again this week, having increased by a fifth over the past two weeks to 86,361 tons, the highest level in two months.

Prices were supported, however, by hopes that the weak data would raise pressure on Chinese policymakers to roll out more stimulus to revive domestic demand.

Also bolstering the market was a softer dollar .DXY as a data-heavy week wound down, keeping the case for a September Federal Reserve interest rate cut intact. FRX/

A decline in the dollar makes commodities priced in the U.S. currency less expensive for buyers using other currencies.

U.S. Comex copper futures HGc2 added 0.4% to $4.50 per lb, bringing the Comex premium over LME copper to $137 a ton, or 1.4%.

Among other metals, LME aluminium CMAL3 shed 0.5% to $2,606 a ton, zinc CMZN3 slumped 1.9% to $2,794 and lead CMPB3 slipped 0.4% to $1,981, while nickel CMNI3 gained 1.1% to $15,190 and tin CMSN3 rose 0.7% at $33,710.

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($1 = 7.1819 Chinese yuan)