BASIC METALS-Copper rises on dollar decline and stimulus expectations in China

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By Eric Onstad

LONDON, Aug 2 (Reuters) – Copper prices rebounded on Monday, driven by a weaker dollar, hopes for more stimulus in China following weak factory numbers and prospects for a strike in Chile.

* At 1000 GMT, three-month copper on the London Metal Exchange (LME) was up 0.6% at $ 9,782 a tonne, after falling 1% on Friday.

* China’s manufacturing activity expanded in July at its slowest pace in 17 months, according to the official Manufacturing Purchasing Managers Index (PMI).

* “Copper is being supported by expectations of China’s looser fiscal policy, which is slowing down, confirmed by the weak PMI, as well as supply shortages following the recent floods in China,” said Gianclaudio Torlizzi of T -Commodity.

* “The outlook for all base metals is bullish in August, supported by a weaker dollar after the latest dovish comments from the Fed. All the conditions are in place for a higher rally,” he added.

* Torlizzi said he had taken bullish positions in copper, aluminum and nickel recently, with forecasts that copper will return to the record high of $ 10,747.50, aluminum will climb to $ 2,700 and nickel will rise to $ 21,000.

* The dollar index fell back to its one-month lows last week, making commodities cheaper for holders of other currencies.

* Workers at Escondida in Chile, the world’s largest copper mine, rejected the company’s offer of a contract on Saturday, increasing the risk of a strike at the deposit.

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