Nickel rose to the highest in almost two months in London on speculation index funds will buy more industrial metals this month to reflect annual re-weightings in their benchmarks. Zinc also advanced. Nickel gained 31 percent in four trading sessions. Buying by funds tracking the Dow Jones-AIG Commodity Index would likely equal 7.7 percent of open interest, according to Robin Bhar, an analyst at Calyon in London. That’s equal to about 6,000 lots, or 36,000 metric tons, based on current data. “That would be four very busy days for nickel,” said Randy North, a trader at RBC Capital Markets in London. Traders and investors have been buying nickel and zinc since late December on anticipation of the index re-weightings, he said. Nickel for delivery in three months added $950, or 8.1 percent, to $12,650 a ton as of 10:01 a.m. on the London Metal Exchange, the highest intraday price since Nov. 5. The metal declined 56 percent last year. Zinc advanced $18, or 1.5 percent, to $1,226 a ton. Commodity investments probably fell to about $145 billion at the end of last month, from $210 billion at the end of the third quarter, Barclays Capital said Dec. 18. Standard & Poor’s said Nov. 3 it would increase the weightings of lead, nickel, zinc and New York-traded copper in its S&P GSCI index. Dow Jones & Co. announced new weightings in August. Manufacturing in China, the world’s largest user of all industrial metals, contracted for a fifth month in December as recessions in the U.S., Europe and Japan sapped demand for exports from the Asian nation. The CLSA China Purchasing Managers’ Index stood at a seasonally adjusted 41.2 compared with a record low of 40.9 last month, CLSA Asia-Pacific Markets said today. A reading below 50 means a contraction. Among other LME-traded metals, copper dropped $30, or 1 percent, to $3,040 a ton and lead fell $16, or 1.6 percent, to $983 a ton. Tin was unchanged at $10,700. Aluminum increased $15, or 1 percent, to $1,510 a ton.

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