* Hot weather lifts demand for copper tubes used in air
* Investors awaits key China data on Thursday
By Susan Thomas and Silvia Antonioli
LONDON, July 31 (Reuters) - Copper rose more than two
percent on Wednesday, supported by upbeat economic data from the
United States which boosted market sentiment but trade was
cautious ahead of a Federal Reserve policy decision.
U.S. economic growth unexpectedly accelerated in the second
quarter, laying a firmer foundation for the rest of the year.
The Commerce Department said gross domestic product (GDP)
stepped up from the first quarter and the ADP National
Employment Report showed private employers maintained a higher
pace of hiring (ADP)in July, adding to the brightening economic
Metals demand benefits from strong economic growth but
investors worry a fast U.S. recovery could lead the Fed to taper
its stimulus programme, which has so far supported commodity
"ADP and GDP data was better than expected so that is
supportive for base metals but you also have to be careful
because as the macro numbers are improving the U.S. could be the
first to curb liquidity and growth in China is still very slow,"
VTB Capital analyst Andrey Kryuchenkov said.
Three-month copper on the London Metal Exchange rose
more than two percent to close at $6,880 a tonne, paring losses
from the previous session when it fell by 2 percent. It closed
at $6,735 on Tuesday.
The Federal Reserve will release a statement from its policy
meeting at 1800 GMT on Wednesday.
"Following the rapid rise in stock markets in July, we
believe there is a risk of volatility and setbacks in the near
term," Credit Suisse said in a research note.
"Among the risks are uncertainty about growth in China,
Eurozone politics and Fed tapering, but we also note the risk
that growth could begin to surprise on the upside."
Markets are awaiting key China's official manufacturing PMI
to be released on Thursday.
China makes up for about 40 percent of global copper
DOUBTS OVER CHINA
Activity in China's manufacturing sector may have contracted
in July for the first time in 10 months, a Reuters poll showed,
signalling a protracted slowdown in the world's second-largest
But signs from China's physical market pointed to steady
buying, which traders said was driven by copper importers with
the metal then sold on the local market to raise cash, given
tight credit conditions.
Also, unusually hot temperatures in China have increased
demand for copper tube that is used in air conditioners.
China's edict to more than 1,900 companies to shut excess
production capacity by September is the latest effort to slim
down bloated industries, but in the aluminium sector, the cuts
are just a fraction of their surpluses.
LME benchmark aluminium, closed at $1,804 per tonne
from $1,776 at the close on Tuesday.
Tin closed at $20,350 per tonne from $19,775, zinc
at $1,843 from $1,836, lead at $2,070 from
$2,030 and nickel at $13,875 from $13,525.