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Copper Swings Between Gains and Drops on Chinese Manufacturing

Copper swung between gains and drops in London, closing in on the first quarterly gain in a year, as investors weighed expanding Chinese manufacturing against a looming government shutdown in the U.S.

A Chinese factory gauge from HSBC Holdings Plc and Markit Economics showed a final September reading of 50.2, lower than estimated by analysts surveyed by Bloomberg. Levels above 50 signal growth. The U.S. government is poised for its first partial shutdown in 17 years at midnight Washington time as Republicans seek to delay President Barack Obama’s health law.

“Although lower than expected, it shows that Chinese manufacturing is growing in September,” Richard Fu, director for Asian commodity trading at Newedge Group SA in London, said by e-mail of the factory measure. “Physical copper demand is not that bad in China,” the biggest consumer of the metal. The U.S. ranks second.

Copper for delivery in three months was little changed at $7,297 a metric ton by 11:15 a.m. on the London Metal Exchange after adding as much as 0.4 percent and sliding as much as 0.6 percent. Prices are up 8.1 percent this quarter, the most in 18 months. Copper for delivery in December fell 0.1 percent to $3.3255 a pound on the Comex in New York.

Failure by Congress to pass a stopgap spending bill before funding expires tonight would mean sending 800,000 federal workers home tomorrow. The Treasury Department has said measures to avoid breaching the government’s debt ceiling will be exhausted on Oct. 17.

Today’s inauguration by the Chinese government of a free-trade zone in Shanghai helped to fuel a “more upbeat mood,” Fu said. The experiment is a test ground for free-market policies.

Copper stocks tracked by the LME declined for an 18th session to 538,025 tons, daily exchange data showed, capping a 19 percent drop for the third quarter after tripling over the three prior quarters. Orders to remove the metal from warehouses fell 1.3 percent today to 271,300 tons, rounding out a first quarterly slump in five.

Aluminum touched a one-month high in London as zinc and lead rose. Nickel fell and tin was unchanged. Markets in China will be closed Oct. 1-7 for National Day holidays.

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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