METALS-Copper resumes downtrend on supply overhang and weak demand

(Updates prices at 1600 GMT) By Eric Onstad LONDON, June 21 (Reuters) - Copper prices slipped on Friday on concern over surplus supplies and sluggish demand in leading metals consumer China, where the currency is also weakening. Three-month copper CMCU3 on the London Metal Exchange fell 1.5% to $9,709 a metric ton by 1600 GMT after three days of gains. The metal used in power and construction has shed 13% since touching a record peak above $11,100 last month. U.S. Comex copper futures HGc2 dropped 2.3% to $4.46 a lb. "The market has been trying to figure out whether the correction phase is coming to an end, but I think it's still too early to call a turnaround," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. "We need data, especially Chinese data, to be more supportive." China's yuan dipped to a seven-month low against the dollar on Friday, hurt by portfolio outflows from mainland financial markets and speculation that the central bank is allowing the currency to weaken gradually. A weaker yuan usually weighs on industrial metals because it makes commodities priced in the dollar more expensive for buyers in China. But Hansen said the impact could be offset because it may have also spurred some stockpiling. Brokers in Asia said the drop in copper prices encouraged more physical purchases this week and provided support around $9,500 to $9,600 a ton. An overhang of metals has weighed on the copper market, with SHFE copper stocks up tenfold since the start of the year to 322,910 tons, reflecting the abundant supply in China. CU-STX-SGH Data showed the global refined copper market had a surplus of 13,000 tons in April and excess supply of 299,000 tons in the first four months of the year. In other metals, LME aluminium CMAL3 dipped 0.2% to $2,516 a ton, nickel CMNI3 fell 1% to $17,255, zinc CMZN3 shed 0.5% to $2,860.50, lead CMPB3 dropped 1% to $2,194 and tin CMSN3 eased 0.9% to $32,785. For the top stories in metals, click TOP/MTL ($1 = 7.2611 yuan) (Reporting by Eric Onstad Additional reporting by Mai Nguyen in Hanoi Editing by David Goodman and Barbara Lewis) (([email protected]; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO; Reuters Messaging: [email protected])) (( For related news and prices, click on the codes in brackets: LME price overview RING= COMEX copper futures 0#HG: All metals news MTL All commodities news C Foreign exchange rates FX= SPEED GUIDES LME/INDEX ))