* Signs of emerging copper demand supporting prices -UBS
* U.S. markets closed for Labor Day holiday
* Potential copper output cuts by Glencore fuel rally
(Adds analyst, trader comment; updates prices)
By Melanie Burton
MELBOURNE, Sept 7 (Reuters) - London copper rallied on
Monday as news of planned production cuts at the African copper
operations of miner trader Glencore fuelled a short-covering
rush.
Glencore GLEN.L said that management at its Katanga Mining
KAT.TO unit in the Democratic Republic of Congo had begun a
review of operations, and that a similar review had started at
Mopani Copper Mines in Zambia in light of the challenging
environment for commodities, which would cut some 400,000 tonnes
of copper production. ID:nJseG0009a
"This is likely to materially improve the supply and demand
balance of copper," said Citi in a note.
Glencore GLEN.L also said it would suspend dividends,
sell assets and raise $2.5 billion in a new share issue as it
aims to cut its debt by a third to $20 billion by the end of
next year. ID:nL5N11D0O4
Three-month copper on the London Metal Exchange CMCU3
jumped by 1.4 percent to $5,192 a tonne, cutting 2.4 percent
losses from the previous session.
Shanghai Futures Exchange copper SCFcv1 climbed 0.8
percent to 39,370 yuan ($6,183) a tonne.
The news encouraged buying early in London and forced
shorts to cover, traders said.
"Short positions held by the non-trade sector are running at
all-time highs and the day will come when they start to cover
which will lead to a very short, sharp rally," said Kingdom
Futures in a note.
There have been emerging signs of a pick-up in copper demand
from mainland China, said analyst Dan Morgan of UBS in Sydney.
"Merchant premia in China have lifted quite strongly which,
with prices being relatively cheaper now, suggests we might see
a little bit of a lift in copper imports."
China's top state planner said on Monday that the country's
power usage, train freight and property market have all shown
improvement since August, indicating that the economy is
stabilizing and potentially shoring up metals demand.
ID:nB9N11100H
China has also given the green light to 77 billion yuan
($12.10 billion) worth of highway and bridge projects, the
latest in a spate of such approvals as Beijing looks to
infrastructure to support economic growth. ID:nB9N111041
Still, keeping traders cautious, a flood of data from China
in coming weeks is expected to point to further weakness
reinforcing expectations that Beijing needs to roll out fresh
stimulus measures. ID:nL4N1183DW
Reflecting a slightly less bearish view on copper, hedge
funds and money managers cut a net short position on copper for
the fourth straight week to the smallest since mid-June, U.S.
Commodity Futures Trading Commission data showed.
ID:nL1N11A1OV
Other LME metals took a ride on copper's coattails, with
aluminium CMAL3 , zinc CMZN3 and lead CMPB3 all up around 1
percent.
PRICES
Three month LME copper CMCU3
Most active ShFE copper SCFcv1
Three month LME aluminium CMAL3
Most active ShFE aluminium SAFcv1
Three month LME zinc CMZN3
Most active ShFE zinc SZNcv1
Three month LME lead CMPB3
Most active ShFE lead SPBcv1
Three month LME nickel CMNI3
Most active ShFE nickel SNIcv1
Three month LME tin CMSN3
Most active ShFE tin SSNcv1
($1 = 6.3675 Chinese yuan)