(Updates prices) By Eric Onstad LONDON, Aug 16 (Reuters) - Copper prices held aboveseven-week lows on Wednesday as arbitrage buying offered supportwhile zinc dropped to its weakest in two months after a surge ininventories. Three-month copper on the London Metal Exchange(LME) was down 0.3% at $8,174.45 per tonne by 1630 GMT, bouncingafter re-testing the seven-week low of $8,148.50 touched in theprevious session.
U.S. Comex copper futures dropped 0.2% to $3.66 alb. LME copper has shed nearly 8% since hitting its strongest inmore than a month at the start of August, with investorsdiscouraged by the lack of strong stimulus in top metalsconsumer China. "The biggest weight on the market right now is the hugedisappointment in Chinese data," said WisdomTree commoditiesstrategist Nitesh Shah. "With today's home sales data looking weak, there areincreasing signs that commodity intensive sectors arevulnerable." Data on Wednesday showed China's new home prices fell forthe first time this year in July, the latest downbeat datapointing to a rapid loss in broader economic momentum. "We are making up to 200 yuan losses per tonne we sellcurrently. And if the property woes continue and areexacerbated, we might see demand fall lower in the followingmonths," said a copper rod producer in China.
The most-traded September copper contract on the ShanghaiFutures Exchange (SHFE) ended day-time trade 1.1% downat a five-week low of 67,550 yuan ($9,258.88) a tonne.
Arbitrage activity supported LME copper as traders sold SHFEfutures and bought on the LME, broker Marex said in a note. Zinc was the biggest loser on the LME, dropping 0.8%to $2,295 a tonne after hitting a two-month low of $2,265.50. Prices slumped after data showed zinc inventories inLME-registered warehouses have surged by 54% over two days totheir highest in 17 months, highlighting a market surplus amidweak demand. LME aluminium added 0.1% to $2,145.50 a tonne afterprices hit a five-week low of $2,130, as consumer buying partlyhelped offset speculator selling over worries about a glut ofthe metal.
In other metals, nickel gained 0.3% to $19,845 whilelead dipped 0.1% to $2,118.50 and tin slipped0.5% to $25,065.
For the top stories in metals, click ($1 = 7.2957 Chinese yuan renminbi) (Reporting by Eric OnstadAdditional reporting by Siyi Liu in BeijingEditing by Alison Williams, David Goodman, Barbara Lewis andJane Merriman)
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