* Markets hoping Fed will take dovish approach to tapering
* LME cash copper near 19-month high against benchmark
* Zinc, lead markets rise, markets in deficit
By Maytaal Angel and Julia Fioretti
LONDON, Dec 16 (Reuters) - Copper hit its highest in nearly
two months on Monday before closing up half a percent, with
investors focused on tightness in nearby supply and falling
Benchmark copper on the London Metal Exchange closed
up 0.5 percent at $7,290 a tonne, having earlier hit $7,307.70 a
tonne, its highest since October 23.
Copper was the latest daily London Metal Exchange data
showing that stocks fell 3,825 tonnes to total 389,175 tonnes -
their lowest since early February.
The lack of supply has pushed the backwardation - premium
paid for cash copper over the three-month benchmark -
to $28 a tonne, near its loftiest in 19 months.
"The copper market is clearly tighter than most people
expected six months ago," BNP Paribas analyst Stephen Briggs
Copper is up more than 3 percent this month, with data from
the Commodity Futures Trading Commission on Friday showing that
investors have turned more upbeat on the metal, trimming net
shorts, or sell positions, to their lowest level in five weeks.
"As we had suspected, copper saw widespread covering of
short positions in the week to Dec. 10. The continued price
increase after the reporting date suggests that money managers
have been continuing to bet on higher copper prices,"
Commerzbank said in a note.
Investors were also waiting for hints on when the U.S.
Federal Reserve will cut its commodity-friendly stimulus
The Fed meets on Tuesday and Wednesday to discuss whether it
should taper its $85 billion monthly bond-buying programme this
week or wait until January or later.
Flagging a brightening outlook for metals, Japanese
manufacturing sentiment improved in the three months to December
for a fourth straight quarter, the Bank of Japan's "tankan"
survey showed, boding well for government stimulus policies
aimed at beating 15 years of deflation.
In the euro zone, meanwhile, data showed December private
sector business activity at its highest since mid-2011, though
the chasm between the bloc's two biggest economies widened.
On the downside, growth in China's factory sector has slowed
to a three-month low in December as reduced output offset a
pick-up in new orders, a preliminary private survey showed on
China, which consumes about 40 percent of the world's
copper, is bracing to pay higher premiums to procure metal next
year as global exchange stocks slump.
In other metals, nickel, the worst performer on the
LME base metals complex this year, closed at $14,030 a tonne
from $14,095, bringing gains for the past two weeks to about 5
Aluminium closed at $1,793.50 a tonne from $1,799
while tin closed at $22,800 a tonne from $22,750.
Zinc closed at $1,992 a tonne from $1,966, having
earlier hit its highest since mid-August at $1,998 a tonne.
Lead finished at $2,166 a tonne from $2,150, having
earlier hit its highest since early November at $2,174 a tonne
The global zinc market was in deficit by 2,000 tonnes in the
first 10 months of the year, while the global lead market was in
deficit by 50,000 tonnes in the same period, monthly bulletins
from the Lisbon-based International Lead and Zinc Study Group
(ILZSG) showed on Monday.
Three month LME copper CMCU3
Most active ShFE copper SCFcv1
Three month LME aluminium CMAL3
Most active ShFE aluminium SAFcv1
Three month LME zinc CMZN3
Most active ShFE zinc SZNcv1
Three month LME lead CMPB3
Most active ShFE lead SPBcv1
Three month LME nickel CMNI3
Three month LME tin CMSN3