COPPER
NEW YORK, April 29 (Reuters) - Copper fell to a six-week low on Friday, ignoring the often supportive influence of a weaker dollar, as technical pressures mounted and U.S. data offered further evidence of slowing economic conditions.
Copper's losses diverged from U.S. industrial share prices, which were buoyed by a fivefold increase in quarterly profits from heavy machinery manufacturer Caterpillar Inc.
Instead, prices crumbled under a negative price chart picture after the front-month May contract broke down below key trendline support around $4.20 per lb.
"The charts do look weak ... I think that the complexion is definitely for a weaker tone given that it is an industrial metal that is performing poor in a scenario where most industrial components are doing well," said Scott Meyers, senior trading analyst with Pioneer Futures in New York.
The most-active July COMEX copper contract slumped to a session low of $4.1580 per lb, its lowest level since March 15, before ending the day at $4.1790, down 8.25 cents from Thursday's close.
It was the second consecutive monthly loss for the metal as concerns about rising inflation and further rounds of interest rate hikes in Asia, Europe and Latin America underscored perceptions of lower demand for raw materials at the start of the year.
Copper was down overnight after data showed inflation pressures on the rise in the euro zone, upping the chances of an interest rate increase in June.
But losses kicked into high-gear after U.S. data showed factory activity in the country's Midwest slowed this month, as tepid demand in the first quarter left businesses with less of a need to rebuild inventories.
"The Chicago PMI was another one in a string of numbers that have been disappointing," said Sterling Smith, an analyst for Country Hedging Inc in St. Paul, Minnesota.
"It's showing that growth is slowing greatly, if not coming to a complete stop," he explained.
SHANGHAI SURPLUS
Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell for the sixth week to their lowest level since mid-February.
Despite the steady fall of stocks in surveyed warehouses, Standard Chartered bank warned that China's copper inventories in bonded warehouses were still on the rise in April.
Stocks in Shanghai's bonded warehouses were hovering at around 650,000 tonnes, equivalent to roughly four weeks of China's domestic use and higher than the 200,000-tonne average over the past three years.
"What is worrying for bulls is that the majority of these copper stocks are tied to finance deals, meaning either that they were bought for the purpose of collecting bank loans, or they were unable to find immediate buyers," the bank said in a report led by analyst Judy Zhu.
"Either would indicate that there is no real demand backing these stocks; hence, we believe a surplus of the metal in China is imminent."
The London Metal Exchange (LME) copper three-month delivery contract was closed Friday for Britain's royal wedding, and will remain shut on Monday for a public holiday. Shanghai will also be shut on Monday. (Additional reporting by Carrie Ho in Singapore and Fayen Wong in Shanghai; editing by Alden Bentley)