LME copper rises 0.9pc after Freeport halts output

SHANGHAI: Copper rose for a second straight day in London as a worsening strike disrupted production at Grasberg, the world's second-biggest copper mine, offsetting concerns that the euro zone crisis may drag on and cause a demand slump.

Freeport McMoRan Copper & Gold Inc halted copper and gold production on Monday at its giant Grasberg mine in Indonesia because of security fears and worker blockades, in the worst supply disruption since a strike began a month ago.

"If such supply-side problems deteriorate much further, they can provide some support to prices," said Ong Yiling, an analyst at Phillip Futures in Singapore.

Three-month copper on the London Metal Exchange gained 0.9 percent to $7,611 a tonne by 0738 GMT, after climbing 3.2 percent in the previous session. It has risen nearly 8 percent in the last two weeks.

The most-active December copper contract on the Shanghai Futures Exchange lost 0.2 percent to close at 55,900 yuan ($8,763.82) per tonne, after rising 2.1 percent in the previous session.

Meanwhile, the global aluminium industry remained sluggish as global miner Rio Tinto signalled a major retreat from its aluminium business on Monday, putting an estimated $8 billion worth of assets up for sale across six countries, only four years after buying aluminium giant Alcan for $38 billion.

"The aluminum industry has been suffering because of over-capacity coming from China," said Henry Liu, associate director of Mirae Asset Securities in Hong Kong.

"This has led to very thin margins. It's very difficult to compete with Chinese producers."

FINANCIAL TURMOIL

In Europe, leaders are facing growing pressures to contain the euro zone debt problems as the world's leading economies pressed them on Saturday to act decisively to resolve the crisis by Oct. 23.

Signalling that euro zone governments are doing their best, German Finance Minister Wolfgang Schaeuble said on Sunday that the region's governments are trying to persuade banks to accept a larger write down on Greece's debt crisis.

"The euro zone crisis remains the major worry. Even if leaders there come up with a plan to resolve the debt crisis, it will involve some sacrifice of banks there,which will have some negative impact on the markets at least in the short term," said Jinrui Futures analyst Zhao Kai.

Copyright Reuters, 2011