SINGAPORE, Sept 25 (Reuters) - London copper rallied to a nine-week high on Tuesday, while Shanghai futures rose nearly 1 percent, but fears of slowing Chinese demand brought on by strong international prices were likely to cap Shanghai's gains.
The Shanghai Futures Exchange December copper contract , the most active, rose 530 yuan to 68,020 yuan a tonne at Tuesday's close.
"Shanghai copper is reluctant to rally. Demand in China is drying up and end-users will not accept higher London Metal Exchange prices and they believe the rally should reverse," a dealer in Shanghai said.
"The right price for copper is below $7,500, but I am a little afraid that during the Golden Week holiday next week LME will break to a new record high."
Chinese markets will be shut all next week for the National Day holiday.
Dealers noted spot copper prices in Shanghai were up 300 yuan a tonne, trading between 67,300 yuan and 67,500 yuan, and would firmly anchor futures.
Copper futures for delivery in three months on the London Metal Exchange were steady at $8,040 -- $760 away from the May 2006 record high -- after rallying 2 percent on Monday.
Copper earlier hit $8,065, its strongest since July 24. Copper contracts on the LME and on COMEX in New York have risen by 26-27 percent this year, while Shanghai futures have gained just 13 percent.
"Shanghai Futures Exchange prices have not followed the LME higher," Sempra Metals economist John Kemp said in a note.
"(Shanghai's) passivity while prices on the LME surge higher tends to confirm rumours swirling round the market that London prices are being driven higher by substantial hedge fund buying out of the United States."
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