May 1, 2019 / 11:14 AM / 3 months ago

METALS-Copper drops to one-month low on selling by computer funds

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Recasts, adds quotes, updates with official prices)

By Zandi Shabalala and Eric Onstad

LONDON, May 1 (Reuters) - Copper prices slid to their lowest in a month on Wednesday as computer-driven funds unleashed selling following an options expiry amid disquiet about demand in top metals consumer China.

Traders said there was no specific news that triggered a sharp reversal in the market around midday after prices had been slightly firmer in the morning. "The market was spooked and we've seen quite a few stops hit in zinc and copper. It was more technical selling than anything in a thin market since most of the Chinese are out today," said a trader at a major broker.

Many markets were closed for the May 1 holiday, including China. "A lot of the selling is from algos (algorithmic computer-driven funds) and we also had the options expiry this morning so a lot of people had to cover positions," the trader added.

Analysts said that while investors welcomed further signs of progress in U.S.-China trade talks, they were still concerned after data on Tuesday showed Chinese factory growth unexpectedly slowed in April.

Benchmark copper on the London Metal Exchange traded down 0.5 percent at $6,383 per tonne in official open outcry activity, having lost 1 percent in April.

It hit a low of $6,331 in electronic trading, the weakest since March 28.

COPPER STOCKS: Inventories of copper in warehouses monitored by the London Metal Exchange fell by 8,825 tonnes from the previous day to 173,575 tonnes MCUSTX-TOTAL.

SPREADS: This helped the premium of cash copper over the three-month contract CMCU0-3 climb to its highest in over a month at nearly $12 despite a recent surge in inventories.

ALUMINIUM INVENTORIES: On-warrant stocks of aluminium MALSTX-TOTAL available jumped to their highest since January at 776,675 tonnes.

U.S. RATES: The U.S. Federal Reserve is expected to leave borrowing costs unchanged later on Wednesday.

DOLLAR: Against a basket of six currencies, the dollar was down slightly after hitting a one-week low ahead of the Fed's decision, making dollar-priced commodities cheaper for holders of non-U.S. currencies.

TIN: Unionised workers at Peruvian miner Minsur's San Rafael tin mine, a major producer of the metal, started an indefinite strike on Tuesday to demand a bonus, the company said.

COLUMN: Industrial metal markets are taking a breather as they await tangible evidence that China's latest stimulus package is feeding through to a flagging manufacturing sector.

PRICES: Three-month aluminium on the LME traded down 0.4 percent at $1,791 a tonne in official rings, zinc shed 0.6 percent to $2,808, nickel shed 0.5 percent to $12,205, lead, untraded in official rings, was bid down 1.2 percent at $1,902 and tin was bid down 0.3 percent at $19,600.

Additional reporting by Mai Nguyen; Editing by Dale Hudson, Emelia Sithole-Matarise

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