(Updates prices)By Peter HobsonLONDON, July 16 (Reuters) - Copper prices rose back towardstwo-year highs on Thursday after data showed a rise in Chinesefactory output, though the numbers also pointed to trouble aheadfor the world's biggest metals consumer.
Benchmark copper on the London Metal Exchange (LME)was up 0.8% at $6,435 a tonne at 1601 GMT, near Monday's peak of$6,633.
The metal used in power and construction has rallied from alow of $4,371 in March, when the new coronavirus spreadworldwide, and many analysts think prices are too high. "We should correct to the $6,000 level," said Robin Bhar, anindependent analyst.
Strong demand for copper from speculative investors meant adeeper correction is unlikely in the short term, he said.
CHINA: China posted a forecast-beating 3.2% year-on-yearincrease in GDP in the second quarter and a rise in industrialoutput, but signs of weak demand at home and abroad pushed itsstock markets down almost 5%.CONFRONTATION: The United States said it had not ruled outfurther sanctions on top Chinese officials to punish China forits handling of Hong Kong. It also said it was studying the national security risks ofsocial media applications including China's TikTok and WeChat. China said it would respond to what it described as"bullying" tactics from Washington. FORECASTS: Analysts polled by Reuters expect LME cash copperto average $6,173 a tonne in the fourth quarter. Speakers at theHKEX Commodities Forum said tight supply could extend copper'srally, but downside risks were rising.UNITED STATES: U.S. retail sales increased more thanexpected in June. EUROPE: The European Central Bank will use its stimulusfirepower fully, even as the euro zone economy shows some signsof rebounding, ECB President Christine Lagarde said. ALUMINIUM: China's primary aluminium production rose to 3.02million tonnes - its highest in six months - in June. OTHER METALS: LME aluminium was down 0.8% at$1,670.50 a tonne, zinc rose 1.1% to $2,224, nickel fell 0.5% to $13,455, lead was little changed at$1,845 and tin was up 0.5% at $17,370. (Reporting by Peter HobsonAdditional reporting by Enrico Dela Cruz in ManilaEditing by David Goodman and Mark Potter)