BASE METALS: Metals End Mostly Lower On US Econ Data, Equities

Aug 03, 2010, LONDON (Dow Jones)--Base metals on the London Metal Exchange ended mostly lower Tuesday on disappointing U.S. economic data and softer equity markets.

Losses were modest despite the poor data, as upwards momentum built up during two weeks of gains remains strong and fresh money is being channeled into metals futures markets, traders said.

Copper ended 1.1% lower at $7,424 a metric ton. Lead was the only metal to push higher, rising to a three-month high of $2,237/ton.

An index for pending sales of existing homes in the U.S. dropped by 2.6% to 75.7 in June, the second consecutive monthly decline. U.S. consumer spending in June came in flat after a gain of just 0.1% in May, reinforcing concerns that one of the U.S.'s biggest economic drivers is struggling.

The poor data reined in U.S. equities following their big gains Monday, even as the euro rose to a three-month high against the dollar.

Arbitrage selling of copper and zinc in Asia weighed on the metals in early trading, as did inventory increases.

Copper stocks rose 1,000 tons, aluminum stocks increased by 22,650 tons, lead stocks were up 900 tons and zinc up 550 tons.

Standard Bank said the metals appear to be heading for a consolidation period, with some longs booking profits on the recent rally.

A senior trader in London said he thought fresh buying from index funds and technically-focused funds such as commodity trading advisors would keep the rally going a while longer. "I think the rally still has some time to go."