By Claudia Carpenter Dec. 1 (Bloomberg) -- Tin rose in London after China’s Yunnan government said it will buy 1 million metric tons of industrial metals for stockpiles. Aluminum dropped to a three- year low and copper erased gains. The purchases include 100,000 tons of tin, according to China Land and Resources News, a newsletter of the Yunnan government. That’s more than 20 times the tin stockpiles in warehouses monitored by the London Metal Exchange. “This is positive for a reduction in stockpiles,” said Shiv Madan, a trader at Dresdner Kleinwort in London. Tin for delivery in three months jumped $250 to $12,550 a metric ton as of 1:13 p.m. on the LME. Copper was unchanged at $3,620 a ton after earlier gaining $90, or 2.5 percent. Copper’s gains were probably in part driven by so-called short covering by traders who were expecting prices to decline, Madan said. Short covering occurs when investors buy commodities to close a bet that prices will fall. Aluminum dropped $39 to $1,733 a ton after earlier falling to $1,725, the lowest since July 7, 2005. Inventories of aluminum rose 20,850 tons to 1.82 million tons, bringing the gain this year to 96 percent. Lead dropped $13 to $1,090 a ton, zinc declined $15 to $1,195 a ton and nickel fell $300 to $9,900 a ton. To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net

Source