Copper hits fresh 2-year high on China PMI data

* LME aluminium, nickel hit 5-month highs; tin 2-yr peak

* Shanghai copper may retrace to 48,000 yuan in Q4 [TECH/C]

* Coming up: U.S. core PCE price index, Aug; 1230 GMT

SINGAPORE, Oct 1 - LME copper hit a fresh 

two-year high on Friday, on upbeat manufacturing data from top
consumer China where markets are closed are closed for the
start of a week-long public holiday.

Three-month copper on the London Metal Exchange CMCU3
rose to $8,106 a tonne, highest since July 31, 2008. It eased
to $8,102.5 by 0630 GMT.

China's manufacturing sector gained momentum last month,
the official purchasing managers index (PMI) number showed,
providing further evidence that the economy is pulling smoothly
out of a second-quarter swoon.

"In the past two months we saw a pickup in PMI, which
foreshadows a rise in demand from China," said Ben Westmore,
commodity economist at National Australia Bank, "That is
probably what copper prices are responding to."

China's financial markets are closed for a week from Oct. 1
to 7 for the National Day holiday.

"It's mainly the PMI, but since China is out, it doesn't
take much to swing the market either way," said a
Singapore-based trader.

"We are likely to see copper press a little higher during
China's absence, on expectation of weaker dollar in addition to
increasing lengths from funds."

On LME's electronic trading platform, just 845 lots have
been traded so far. Normally about 2,000 lots go through the
system during Asian business hours.

Adding to the bullish sentiment, Vedanta Resources' (VED.L)
Indian unit Sterlite Industries (STRL.BO) shut down its
Tuticorin copper smelter, the world's ninth-largest, on court
order on Wednesday, and said it is seeking time to appeal the
order.

Shanghai copper closed at 60,600 yuan a tonne on Thursday,
while LME copper stood at $8,028. The arbitrage window between
the two markets is firmly shut, with Shanghai at a discount of
2,238 yuan to LME on Thursday.

The market is eyeing the core PCE price index from the U.S.

later today, to assess the health of the world's largest
economy. 

Wall Street wrapped up its best quarter in a year on
Thursday with the S&P and Nasdaq logging in the biggest monthly
gains since April 2009, as data showed the economy isn't in
such bad shape.

Some warned that copper prices have gone out of sync with
fundamentals, as demand has yet to recover to the level before
the financial crisis and prices are already at pre-crisis
levels.

"The concern in the market is that the prices are getting a
little bit frothy, that it doesn't really coordinate with
fundamentals," said Westmore of NAB.

"It will be interesting to see some market players to pare
some of their positions. Most likely we'll see some moderation
before China comes back."

Shanghai copper SCFc3 is seen to retrace to 48,000 yuan a
tonne over the fourth quarter, as the consolidation that
started from January high of 64,180 yuan has not completed,
according to Reuters market analyst Wang Tao. 

LME aluminium CMAL3 vaulted to a more than five-month

high of $2,374. LME nickel CMNI3 also hit a five-month peak
of $23,780. Tin CMSN3 hit $24,620, its highest since May
2008. Source: Reuters

Base metals prices at 0630 GMT
 Metal         Last       Change   Pct Move  End 2009 YTD pct
chg
 LME Cu        8102.50     92.50     +1.15    7375.00     
9.86
 LME Alum      2372.00     21.00     +0.89    2230.00     
6.37
 LME Zinc      2237.00     42.00     +1.91    2560.00   
-12.62
 LME Nickel   23750.00    350.00     +1.50   18525.00    
28.21
 LME Lead      2310.50     31.50     +1.38    2432.00    
-5.00
 LME Tin      24620.00    370.00     +1.53   16950.00    
45.25