Zinc Climbs as 21% Slump Attracts Buyers, Asian Stocks Gain

SHANGHAI, May 24 -- Zinc climbed for a third day on speculation a 21 percent plunge in prices in the past four weeks overstated the risk from slowing demand in China and Europe.

Three-month delivery zinc on the London Metal Exchange advanced as much as 2.8 percent to $1,944 a metric ton and traded at $1,938 at 12:17 p.m. in Shanghai. Nickel gained as the MSCI Asia Pacific Index reversed losses on speculation China may soften its stance on fiscal tightening.

The Reuters/Jefferies CRB Index of 19 commodities fell 10 percent in the past four weeks, and an index of London-traded metals slumped 13.7 percent in the same period on speculation European efforts to curb government debt will erode economic growth and China may step up measures to reduce asset bubbles.

"Zinc was down more than its peers so the rebound is buying on the dip," Zhu Yanzhong, an analyst at Jinrui Futures Co. said from Shenzhen. The rebound will be "limited," he said.

Copper was little changed at $6,852 a ton after declining earlier for the first time in three days on renewed concern Europe's debt crisis will slow the region's economic growth.

The euro weakened against the dollar, ending three days of gains, after European Union finance ministers pledged to impose tougher measures to prevent member states running large deficits and ruled out setting up a mechanism to manage state defaults. Commodities, priced in the dollar, usually move in the opposite direction to the currency.

Still 'Vulnerable'

"Metal prices remain vulnerable due to frail sentiment and continue to move in tandem with currencies and equities," Zeng Chao, an analyst at Everbright Futures Co., said from Shanghai.

Still, inventories of copper monitored by the LME declined for a 13th week to the lowest since Dec. 21, 2009.

Copper for August delivery in Shanghai climbed as much as 2.7 percent to 55,120 yuan ($8,073) a ton and last traded at 54,890 yuan a ton.

Aluminum in London advanced 0.2 percent to $2,060 a ton, nickel rose 1.6 percent to $21,700 a ton and lead added 0.9 percent to $1,827 a ton. Tin was yet to trade.