Copper reverses gains after earthquake hits Japan

* Magnitude 8.9 earthquake shook Japan

 * LME copper heading for worst week since June 2010

 * Coming Up: U.S. retail sales; 1330 GMT

 (Recasts; updates prices)	

 By Rujun Shen	

 SINGAPORE, March 11 (Reuters) - London copper prices
reversed early gains on Friday, after a strong earthquake jolted
Japan and sent shockwave across global financial markets.	

  A massive 8.8 magnitude quake hit the northeast coast of
Japan on Friday causing a tsunami to hit coastal areas and
shaking buildings in the capital Tokyo. The Japanese government
warned of strong aftershocks and more
damages.  	

 "It feeds into the already risk-negative week, with
political unrest in the Middle East and the slightly weak China
import data for base metals. All of those factors have fed into
sentiment towards commodities this week," said Daniel Major, an
analyst at RBS.	

 Three-month copper on the London Metal Exchange 
reversed early gains to $9,184.75 tonne by 0700 GMT, down $6
from the previous close. It was headed for a seven percent
weekly loss, its biggest since last June.	

 Shanghai's third-month copper futures contract also
reversed course to end down 10 yuan, or 0.01 percent at 69,220
yuan, headed for its worst week since May 2009.	

 Industrial metals were already under pressure on worries
about high oil prices, sparked by unrest in the Middle East,
that may hurt the global economy.	

 "The other half of the reason is people are pretty concerned
about Chinese consumption patterns based on the trade data
yesterday and some of the issues people have been talking about
in the past few months in term of what the macro policy is going
to be," said a Sydney-based trader,	

 "This really serves as a dual threat that is pressuring the
markets. But at the end of the day, I also believe that markets
are looking for a chance to sell off."	

 China's inflation levelled off in February while industrial
output accelerated, tentative signs that the government is
succeeding in taming price pressures without unduly harming
growth in the world's second-largest economy. 	

 Further monetary tightening to tamp inflation in China
however remains a possibility. 	

 Output of most industrial metals showed strong growth in the
first two months of the year. Refined copper output gained
nearly 8 percent to 795,000 tonnes, while copper products,
semi-finished products and alloy output jumped 15.2 percent on
the year. 	

 "The output data is quite strong, although there's concern
that output growth could have outpaced demand growth, which
might cause some problems in the coming months," said Judy Zhu,
an analyst at Standard Chartered in Shanghai.	

 Zhu said the trade and output data in March will be key to
understanding the situation on the ground, since the Lunar New
Year holiday in February probably distorted the picture in the
first two months of the year.	

 LME copper is seen to have strong support around $9,200. It
may rebound to $9,600 next week, said Reuters market analyst
Wang Tao. 	

 "I think $9,000 is the bottom. This is the point when the
Chinese will aggressively enter the market," said the
Sydney-based trader.	

 "They seem fairly well stocked in the near term, and there
is no reason to jump in right away."	

 Investors were watching the escalating tension in the Middle
East and its impact on the oil market, and the euro zone debt
crisis has resurfaced with Moody's downgrading both Spain and
Greece this week.  	

 The euro zone leaders plan to meet later in the day to
discuss how to the solve the region's debt crisis, but the
meeting is unlikely to produce a breakthrough. 	

    	
 Base metals prices at 0700 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            9184.75     -6.25     -0.07     -4.33
  SHFE CU FUT MAY1    69220       -10     -0.01     -3.66
  LME Alum          2580.75     -4.25     -0.16      4.48
  SHFE AL FUT MAY1    16760       -25     -0.15     -0.48
  HG COPPER MAY1     416.95     -0.25     -0.67     -6.08
  LME Zinc          2283.00     -3.00     -0.13     -6.97
  SHFE ZN FUT MAY1    17745        10     +0.06     -8.88
  LME Nickel       25980.00    -70.00     -0.27      4.97
  LME Lead          2431.25      1.25     +0.05     -4.66
  LME Tin          29700.00    400.00     +1.37     10.41
  LME/Shanghai arb^          1439
  Dollar/yuan          6.5753 \ 6.5762

Shanghai and COMEX contracts show most active months

^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE  third month