Copper jumped on Tuesday as the market eyed bullish equity market sentiment, but analysts warned price gains would be limited until signs of strong global economic recovery emerge. Stocks of aluminium in London Metal Exchange warehouses surged through the 4 million tonne level to weigh on prices of the metal used widely in transport and packaging. Three-month aluminium on the London Metal Exchange was $1,525 a tonne at 0957 GMT compared with $1,520 a tonne at the close on Monday, while copper was at $4,635 a tonne from $4,520. Prices of copper, a key material in the power and construction industries, have in recent days yo-yoed with sentiment on equity markets, which analysts say could mean the global economy has reached a crisis point. "We are at a crossroads and it's not surprising ... I am sceptical, I don't think the economic problems are over," said Eugen Weinberg, commodities analyst at Commerzbank. "Data has been better than expected, but expectations were very low. It's not difficult to meet or beat expectations if they are as low as they are at the moment." Industrial metals markets are looking ahead to April housing market data from the United States later on Tuesday. Traders said the market is looking for more positive numbers after solid results from U.S. home improvement retailer Lowe's Cos sparked a Wall Street rally on Monday. NEAR-TERM BEARISH BIAS Part of the reason behind the rally in copper prices this year -- about 50 percent -- has been stockpiling by China, the world's largest consumer. But that, analysts say, is coming to an end and a seasonal lull in industrial activity over the next few months will also weigh on copper as will the realisation that prices are now too high for China's State Reserves Bureau and consumers. "We maintain our near-term bearish bias ... as we believe that the impact of the China-led rally has largely played out," Goldman Sachs said in a note. "We remain constructive on the base metal sector consistent with an expectation of a strong economic recovery in China from (second quarter of 2009) and the beginning of a global economic recovery in (second half of 2009)." However, metals markets will closely watch LME stocks, which for copper have fallen to around 350,000 tonnes, a drop of nearly 60 percent since late February and the lowest since early January, for clues to demand. Analysts say most of the drop can be accounted for by deliveries to China where the premium for physical metal has been high enough to make it worthwhile. "But I don't think the Chinese will be buying at current prices," Weinberg said. Prices of steel materials zinc and nickel were at $1,550 a tonne and $12,705 a tonne from $1,518 and $12,350 respectively and battery material lead was at $1,529 from Monday's last quote at $1,485. Tin was at $13,950 from $13,650 on Monday. Worries about a supply squeeze are reflected in the premium of more than $200 a tonne for cash material over the three-month contract. But that is expected to fall as the dominant position controlling between 50 and 80 percent of cash warrants on LME stocks has slipped to between 40 and 50 percent. Metal Prices at 0953 GMT Metal Last Change Percent Move End 2008 Ytd Percent

Source