(Updates prices) LONDON, March 3 (Reuters) - Copper prices on Fridayheaded for their biggest weekly gain since early January asstrong economic data in top consumer China raised demand hopes.
Benchmark copper on the London Metal Exchange (LME)was roughly unchanged at $8,956.50 a tonne at 1717 GMT and uparound 2.8% for the week.
Prices hit a seven-month high of $9,550.50 in January butstalled amid slack Chinese demand and expectations that the U.S.Federal Reserve will raise interest rates further, dampeningeconomic growth and boosting the dollar. A stronger dollar makes metals costlier for non-dollarbuyers and can suppress demand.
"Until it is clear that the Fed has broken the back ofinflation, it will remain difficult for metals as a whole tosustainably rally absent clear signs of stockout risk," saidanalysts at Goldman Sachs.
Visible copper inventories are low by historical standardsbut stocks in Chinese bonded and Shanghai Futures Exchange(ShFE) warehouses have surged to 408,680 tonnes from around100,000 tonnes in late December. That said, ShFE stocks fell by 11,475 tonnes in the week toFriday, the first weekly fall since December, suggesting demandmay be picking up.
Data this week showed Chinese factory activity increased inFebruary at the fastest pace since 2012 and the services sectorexpanded rapidly. China may aim for a 6% growth rate in 2023,sources told Reuters.
However, analysts at Citi said a Chinese rebound was alreadypriced in.
"We recommend waiting for opportunities to establishlong-term copper exposure at <$8,500," they wrote, adding thataluminium was best placed to benefit from higher Chinese demand. Meanwhile, a British financial regulator said it hadlaunched an "enforcement investigation" into the LME's handlingof the nickel market last year.
LME aluminium was up 0.1% at $2,401 a tonne, zinc rose 0.2% to $3,054, nickel climbed 0.4% to$24,500 and tin gained 0.1% to $24,600. Lead wasdown 0.8% at $2,109.50.
Aluminium, zinc and lead were headed for weekly gains,while nickel was flat and tin fell.
(Reporting by Peter Hobson; additional reporting by Siyi Liuand Dominique Patton; editing by Jason Neely and Louise Heavens)
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