Copper slips on firm dollar, strike concerns support

LONDON, May 7 (Reuters) - Copper prices on the London Metal Exchange narrowed earlier losses by mid-session on Wednesday with a firm dollar capping prices while worries about future supplies gave prices a floor, analysts said.

"The fall across metals is lead by copper and short term it looks like it could go down further," said John Meyer, head of resources at Fairfax IS. "The dollar is strengthening which has a dampening effect on metal prices."

Copper for delivery in three months shed $14 to $8,506 by mid-session, after gaining 1.3 percent on Tuesday.

Three-months lead was down $58 at $2,497, and by 1231 GMT prices dropped 3.7 percent or $95 to $2,460/2,470 a tonne.

The gradual rise in stocks, up 26 percent so far this year, and sluggish seasonal demand was behind the fall, traders said.

Earlier copper hit an intraday low of $8,432, down 1 percent, as a strike at Chile's Codelco had come to an end with the loss of some 24,000 tonnes of copper, according to Fairfax.

Chilean copper giant Codelco's subcontract miners on Monday agreed to end their strike, after voting to accept a government proposal. Production will resume on Friday. [ID:nN05372495]

Concerns over tight supplies continued to give prices a floor with copper prices up some 27 percent so far this year.

Copper in LME-registered warehouses stand at 109,025 tonnes, having almost halved since the start of this year and only enough for less than three days' of global consumption.

Despite the end to the latest copper strike at Codelco, another one seems to be potentially filling the void, analyst Edward Meir at MF Global said in a report.

Unions at mines in Peru said that they are ready to strike next week to demand better labour benefits. [ID:nN06491860]

"Despite the spectre of the Peruvian strike, the markets are broadly lower today on the back of a stronger dollar," Meir at MF Global said.

Weak euro zone maufacturing and retail data combined to send the euro towards five-week lows versus the dollar, while the greenback garnered support after hawkish comments from a Federal Reserve official. [ID:nL07788060]

A firmer U.S. currency makes dollar-priced metals more expensive for holders of other currencies.

Also the zinc market was affected by strike with workers at Namibia's biggest zinc producer Skorpion Zinc going on strike from Friday over a pay dispute. [ID:nL07795057] The mine, owned by Anglo-American , produces 150,000 tonnes of special high-grade zinc per year.

Three-month zinc fell 1.5 percent or $35 to $2,245/2,265 per tonne.

In other metals, aluminium eased $37 to $2,936 per tonne. Nickel was down $375 at $28,525. The metal is expected to remain sluggish in the near future given news that leading Chinese stainless steel makers are cutting production and slashing spot sales in this month.

Tin shed $50 to $24,050/24,100, not far off its all time high of $24,600 recorded on April 24.

(Additional reporting by Alfred Cang in Shanghai; editing by Chris Johnson)

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