LONDON, Sept 23 (Reuters) - Base metals scaled multi-month peaks on Thursday as investors bet fundamentals would continue to improve through the year end, despite weak data from the U.S. and the eurozone.
Benchmark copper on the London Metal Exchange was at $7,850 a tonne at 1416 GMT from Wednesday's close of $7,840 per tonne. The metal, used in power and construction, earlier hit a five-month high at $7,906.25 per tonne.
Three-month aluminium hit $2,276.50 a tonne for the first time since April, while zinc hit $2,244.50, its highest level since the start of May.
New U.S. claims for unemployment benefits rose unexpectedly last week, government data showed, highlighting continued labour market weakness and overshadowing better than forecast August existing home sales figures.
"We've had weak U.S. jobless claims, that's why we're reversing earlier gains but metals are strong relative to other commodities," said Andrey Kryuchenkov, analyst at VTB Capital.
"Copper in the short, medium and long term is supported, even if we get poor data, $7,100 is maximum downside retracement (because) despite everything we're still seeing consistent stock draws."
Latest LME data showed copper stocks fell by 1,975 tonnes to 380,125 tonnes, remaining close to their lowest since last November. Inventories have fallen by one third since mid February, when they stood at six-year highs of 555,075 tonnes.
Also, the global market deficit for refined copper widened in the first half to 281,000 tonnes from 125,000 tonnes the year before, the International Copper Study Group said this week.
Inventories fell across four of the six major metals contracts on Thursday, highlighting a pick up in demand post summer. However the recent price rise, given the absence of Chinese consumers, could be overdone, analysts said.
"Although better fundamental data recently justified a rise in copper prices, this was exaggerated in our view and correction potential has thus resulted," Commerzbank said in a research note.
SHINE OFF
Taking the shine briefly off metals, the dollar rose from a five-month low versus the euro, making dollar-priced metals costlier for European investors.
Foreign exchange markets could exert fresh pressure on metals later this session, with volumes drained by holidays in Asia. China, Japan, Hong Kong and South Korea are closed for holidays this session.
Also denting sentiment, stock markets, seen by some as a proxy for economic growth prospects, fell in Europe and the U.S, under pressure from disappointing U.S jobless claims data and weak eurozone figures.
The pace of growth in the euro zone's services and manufacturing sectors slowed much more than expected this month, data showed earlier, adding to worries about the strength of the global economic recovery.
Nevertheless, analysts remain upbeat on metals longer term, with Barclays Capital noting commodities have grown in popularity as an investment asset and that institutions are taking a more active approach to managing risk.
"The picture has improved markedly so far in September. Macroeconomic pessimism is lessening after stronger-than-expected European growth, better U.S. data and signs that the policy-induced slowdown in China may be bottoming," it added.
Across other metals, aluminium traded at $2,269.50 a tonne versus $2,235, zinc at $2,224 against $2,192 and lead at $2,243.25 versus $2,223.50.
Nickel was at $22,579 from $22,560. It reached a 4-1/2-month peak of $23,570 last week.
LME nickel inventories rose by 468 tonnes according to LME data today. Tin was at $23,400 from $23,300.
Metal Prices at 1410 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 356.70 0.80 +0.22 334.65 6.59 LME Alum 2265.00 30.00 +1.34 2230.00 1.57 LME Cu 7854.00 14.00 +0.18 7375.00 6.49 LME Lead 2242.00 18.50 +0.83 2432.00 -7.81 LME Nickel 22500.00 -60.00 -0.27 18525.00 21.46 LME Tin 23325.00 25.00 +0.11 16950.00 37.61 LME Zinc 2224.00 32.00 +1.46 2560.00 -13.13 SHFE Alu 15725.00 -35.00 -0.22 17160.00 -8.36 SHFE Cu* 59830.00 -420.00 -0.70 59900.00 -0.12 SHFE Zin 17805.00 -300.00 -1.66 21195.00 -15.99 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
