BASE METALS: LME Metals Close Higher on US Data, Equities

LONDON, Aug 17, 2010 (Dow Jones Commodities News via Comtex) --

Base metals on the London Metal Exchange extended their gains Tuesday, closing higher for a second session after reports out of the U.S. showed a bigger-than-expected rise in housing starts and a rebound in industrial production.

U.S. industrial production recovered in July after a slight dip the previous month, climbing 1.0% compared to economists' expectations of a 0.7% rise, while U.S. housing starts increased by 1.7% compared with expectations of an 0.2% rise.

The copper market in particular closely monitors the figures, as the metal is widely used in manufacturing and construction.

The complex also continued to find support from a stronger euro, climbing U.S. stock futures and general inventory drawdowns.

Copper closed up 1.8%, at $7,382 a metric ton, buoyed in particular by a continued fall in its LME-listed stocks, market participants said.

"A better tone in Asia and European equity markets has also been helpful, leading to a higher opening call for the U.S. equity markets," said MF Global analyst Edward Meir.

Analysts are uncertain, however, over whether the rally can be sustained giving ongoing macroeconomic concerns.

"We would be reluctant to chase the current advance, as we think the markets have the headwind of slowing economic growth to contend with for a little while longer," Meir said.

Copper is expected to face strong resistance at $7,500/ton, with support at $7,050/ton.

Prices in dollar a metric ton.

3 Months Metal                             Bid-Ask                               Change from

                                                                          Monday PM kerb

Copper                    7382.0-7383.0          Up 132.5

Lead                      2130.0-2130.5          Up 36

Zinc                      2123.0-2125.0          Up 51

Aluminum                  2140.0-2141.0          Up 22

Nickel                    21950.0-21955.0        Up 430

Tin                       21300.0-21350.0        Up 205

Aluminum Alloy            2145.0-2150.0          Up 15

Aluminum Alloy-NASAAC     2120.0-2125.0          Up 30