Copper dips as unrest spurs inflation worries

* Investors fear higher interest rates in China

 * Ivernia sees resumption Australian lead mine ops shortly

 * Rise in oil price will dampen copper price- Codelco

 * Coming up: US durable goods, new home sales Thursday
 

(Recasts, adds details, new dateline/byline, New York copper close)

 By Frank Tang and Melanie Burton

 NEW YORK/LONDON, Feb 23 (Reuters) - Copper prices fell to their lowest
in nearly a month on Wednesday as escalating unrest in Libya and surging
oil prices threatened to derail global economic recovery, weighing on
prospects for industrial metals.

"Concerns have been building with regards to the geopolitical situation
in North Africa and the Middle East, which could have an impact on global
economic growth," said analyst Gayle Berry of Barclays Capital.

 "This is really shaking the market," Berry said.

 Three months copper CMCU3 on the London Metal Exchange ended at
$9,425 a tonne, down 1.6 percent from its Tuesday close. Earlier, prices
had plumbed their lowest since late January at $9,375.

 The metal used in power and construction has slipped by about 8 percent
from record highs at $10,190 hit mid-month.

 COMEX copper for March delivery HGH1 ended down 7.15 cents at $4.2755
per lb, extending consolidative pullback from its record of $4.6495 set on
Feb. 15.

 Turnover was about 50 percent higher than the 30-day average,
consistent with recent larger-than-usual volume, prompting investors to
worry that copper's decline could accelerate.

 Thousands of Libyans celebrated the liberation of the eastern city of
Benghazi from the rule of Muammar Gaddafi on Wednesday, who was reported to
have sent a plane to bomb them as he clung to power. [ID:nLDE71L2LE]

 U.S. crude oil futures CLc1 marched rapidly to hit $100 a barrel on
possible supply disruption from Libya, stoking inflationary worries. [O/R]

 Investors feared that surging energy prices may boost inflation growth
and force the government in top metals consumer China, and elsewhere, to
raise interest rates.

 Wall Street fell sharply for a second day as investors sold riskier
commodities and sought safety in bonds, gold and the Swiss franc due to
worries that turmoil will spread to other countries in North Africa and the
Middle East. [MKTS/GLOB]

 Markets were concerned that this could slow down the economy and weaken
demand for base metals.

 "This is not a metal-specific or fundamental-specific (downwards) move.
I do feel that this is very much sentiment-driven," Berry said.

 She added that fundamentals, especially for copper, remained positive
but that metals prices will continue to suffer until the political tensions
come to an end.

 A further rise in crude oil prices will dampen copper prices, though
demand from key buyers in China, the United States and Europe so far looks
solid, a senior executive at the world's top copper producer Codelco
[CODEL.UL] said. [ID:nTOE71M050]

 NICKEL DEFICIT SEEN

 Nickel CMNI3 finished slightly up at $28,700, from $28,650, despite
inventories that have declined since mid-January as seasonal demand from
the stainless sector picks up. MNI-STOCKS

 It hit its highest level since late April 2008 on Monday at $29,425 a
tonne.

 Brazilian miner Vale (VALE5.SA: Quote) (VALE.N: Quote) said on Friday it would lose
around 5 percent of its total 2011 nickel production due to a 16-week
shutdown of a smelter furnace. [ID:nN18265116]

 The closure at its Copper Cliff smelter in Sudbury, Canada, stands to
significantly weigh on supply and may push the market into deficit,
Standard Bank said.

 "The unexpected smelter closure ... now stands to put a significant
dent in what had looked like being a balanced market, with major
implications for outright prices and stock trends," Standard Bank said.

 The bank said it now estimates the loss of production at 15,000
tonnes.

 Elsewhere, news that the West Australian government has lifted an order
blocking lead shipments to the port of Fremantle undermined support for the
metal. [ID:nL3E7DN0DC]

 Battery material lead CMPB3 ended at $2,539 from a close of $2,565 a
tonne.

 Aluminium CMAL3 closed at $2,530 from $2,528 while tin CMSN3,
untraded in rings, was bid at $31,500 from $31,600.

 Zinc CMZN3, used in galvanizing, closed at $2,495 from $2,490
Tuesday's close.

 A key global miner and smelting firms agreed to 2011 benchmark zinc
treatment charges of $229 per tonne based on a $2,500 per tonne London
Metal Exchange (LME) zinc price <0#MZN:>, according to sources attending
the International Zinc Association conference. [ID:nTOE71M043]
Metal Prices at 2:06 p.m. EST (1906 GMT)
 Metal            Last      Change  Pct Move   End 2010   Ytd Pct

                                                         move
 COMEX Cu       430.65       -4.05     -0.93     444.70     -3.16
 LME Alum      2530.00        2.00     +0.08    2470.00      2.43
 LME Cu        9425.00     -385.00     -3.92    9600.00     -1.82
 LME Lead      2538.50     -136.50     -5.10    2550.00     -0.45
 LME Nickel   28680.00       30.00     +0.10   24750.00     15.88
 LME Tin      31500.00     -850.00     -2.63   26900.00     17.10
 LME Zinc      2494.00        4.00     +0.16    2454.00      1.63
 SHFE Alu     17010.00     -160.00     -0.93   16840.00      1.01
 SHFE Cu*     71700.00    -1880.00     -2.56   71850.00     -0.21
 SHFE Zin     19330.00     -410.00     -2.08   19475.00     -0.74
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Source: http://af.reuters.com/article/metalsNews/idAFLDE71M0ZP20110223)