Metals boosted by equities in LME trade

Print this page Posted on : 11-25-2008 by recycleinme.com

London, Nov. 24

Base metals on the London Metal Exchange were higher in Europe on Monday helped by stronger equity markets, but traders and analysts said given the backdrop of slowing global growth and broader financial market uncertainty the metals' lows are still to come.

At 1019 GMT LME copper was trading at $3,640 a tonne, up 2.8 per cent from Friday's kerb close. LME aluminium was trading at $1,800/tonne, up 2.9 per cent; LME lead was trading at $1,215/tonne, up 2.8 per cent; LME nickel was trading at $10,325/tonne, up 3.3 per cent; LME zinc was trading at $1,207/tonne, up 2.7 per cent; and LME tin was trading at $11,900/tonne, up 3.4 per cent.

''Equity markets are looking a bit healthier and that is helping sentiment in base metals,'' said Citi analyst Mr David Thurtell. Indeed, European stock were higher Monday with the bailout of banking behemoth Citigroup Inc. (C) taken as a sign that governments stand ready to prevent further distress to the financial system.

The dollar was weaker against the euro, also providing a boost to metal prices, traders said.

''Given developments over the weekend we wouldn't be surprised to see a firmer trend unfold,'' said BaseMetals analyst Mr Will Adams.

However, while a less nervous tone in equities was helping base metals, traders said the lows haven't yet been reached.

The panic selling is slowing across the commodity complex but given the backdrop of sluggish global growth copper could still drop to $3,000/tonne, or towards $2,700/tonne as a ''final washout,'' a London-based trader said.

The trader said base metal positions have been short and more short-covering is likely through mid-December. Prices could be a bit firmer in the first quarter of next year.

Source : Business Line