LONDON, May 16 (Reuters) - The CME Group ( CME ) has

raised its margin requirements for trading copper futures, which

hit record highs this week, effective after the close of

business on Thursday.

The U.S. exchange operator raised the outright margins on

copper futures by $500 to $5,000 per contract, the CME's

clearing house said in a notice.

Sources told Reuters on Wednesday that commodity traders

Trafigura and IXM were seeking physical copper to cover large

bearish positions on the CME exchange, where U.S. copper futures

surged to record highs.

May Comex copper futures hit a record of $5.18 a lb

on Wednesday and were up 1% at $5.02 on Thursday at 0905 GMT,

having surged by 30% so far this year.