METALS-Copper extends retreat on soggy Chinese factory data, stronger dollar

By Eric Onstad

LONDON, Oct 31 (Reuters) - Copper prices extended losses on Friday, weighed down by weak industrial data in top metals consumer China, a firm dollar and profit-taking following a recent advance to a record peak.

Three-month copper on the London Metal Exchange CMCU3 was down 0.3% at $10,882.50 per metric ton by 1715 GMT, the second day of losses after touching a high on Wednesday of $11,200.

LME copper has gained 5.7% so far this month and is heading for a third straight monthly gain.

U.S. Comex copper futures HGc3 slipped 0.4% to $5.08 a lb.

Data showed on Friday that China's factory activity shrank for a seventh month in October, dragged down by a drop in new export orders as the boost from months of front-loading to beat U.S. tariff threats finally wore off.

STRONG DEMAND GROWTH NEEDED

"Today's China data has weighed on sentiment in the base metals complex," said Ewa Manthey, commodities strategist at ING. "While near-term demand indicators remain mixed, supply disruptions will keep a floor under prices around the $10,000 per ton level."

"However, to push that rally further, copper will also need to see strong demand growth, especially from China," she added.

The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 eased 1.7% to 87,010 yuan ($12,215.36) a ton. It also was set for a third straight monthly gain, rising 4.8%.

Many Chinese buyers have been on the sidelines as prices rallied.

The Yangshan copper premium SMM-CUYP-CN, which reflects demand for copper imported into China, has dropped 28% over the past month to $36 a ton.

Also pressuring the market was a slightly stronger dollar index =USD, which was hovering near a three-month peak touched on Thursday. A firmer dollar makes greenback-denominated assets more expensive to holders of other currencies. FRX/

Marex warned in a note that copper's retreat may have further to run, saying: "Caution, we note some indicators are suggesting that further corrective price action could be necessary."

LME aluminium CMAL3 rose 0.8% to $2,887 a ton, shrugging off a jump in LME inventories MALSTX-TOTAL by a fifth, due to a 102,275-ton inflow to warehouses in Malaysia.

Among other metals, LME nickel CMNI3 was unchanged at $15,230 a ton, zinc CMZN3 gained 0.5% to $3,051.50, tin CMSN3 climbed 0.8% to $36,075 and lead CMPB3 eased 0.2% to $2,018.

For the top stories in metals, click TOP/MTL

($1 = 7.1230 Chinese yuan)

 For related news and prices, click on the codes in brackets: LME price overview      RING= COMEX copper futures  0#HG: All metals news         MTL   All commodities news      C 
 Foreign exchange rates FX=SPEED GUIDES LME/INDEX