METALS-LME copper rises as improving Chinese industrial profits offset pressure from dollar

By Lucas Liew

Aug 28 (Reuters) - Three-month copper on the London Metal Exchange gained ground on Wednesday, as signs of improving profitability among China's industrial firms outweighed pressure from a stronger U.S. dollar.

Three-month copper on the London Metal Exchange CMCU3 rose 0.38% to $9,793 per metric ton by 0215 GMT, while the most-traded copper contract on the Shanghai Futures Exchange SCFcv1 eased 0.49% to 78,960 yuan ($11,038.88) a ton.

A stronger dollar weighed on investor appetite, though losses were contained by signs of easing strain on China's industrial companies, suggesting that efforts to curb overcapacity are starting to ease the strain from aggressive competition among producers, said analysts from ANZ.

Profits at China's industrial firms declined by 1.5% in July year-on-year, marking a notable improvement from the 4.3% slump recorded in June.

Meanwhile, the dollar index =USD, which measures the currency against six major peers, remained steady at 98.135 after two consecutive days of declines, as markets monitored the possibility of interest rate cuts next month.

A stronger U.S. dollar makes greenback-priced metals more expensive for holders of other currencies, which can dampen demand and weigh on prices.

With the off-season coming to an end, downstream demand is expected to gradually recover, said broker Everbright Futures.

Still, rising inventories in LME-registered warehouses weighed, increasing by 1,100 tons to 156,000 tons.

Among other London metals, aluminium CMAL3 rose 0.37% to $2,612 a ton, nickel CMNI3 edged up 0.06% to $15,140, lead CMPB3 climbed 0.1% to $1,986.5, tin CMSN3 increased 0.14% to $34,600, and zinc CMZN3 was up 0.29% at $2,769.5.

SHFE aluminium SAFcv1 decreased 0.58% to 20,730 yuan, nickel SNIcv1 lost 0.92% to 120,710 yuan, lead SPBcv1 eased 0.15% to 16,890 yuan, and zinc SZNcv1 fell 0.92% to 22,145 yuan, while tin SSNcv1 increased 0.48% to 272,780 yuan.

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