London 13/07/2011 - Base metals rose in LME pre-market trading on Wednesday, boosted by reassuring Chinese growth figures amid expectations of a third round of quantitative easing in the US. The rally started on Tuesday after a decline in the dollar prompted a bout of short-covering across the metals, with lead and tin the main beneficiaries. Copper and aluminium were also lifted by good consumer buying. The top performers today were lead and copper, with the former hitting a three-month high above $2,770 per tonne. "It's a bit of a currency market play at the moment - the euro has recovered well and dragged commodities along," an LME trader said. "Copper in particular has performed very well lately - some people seem eager to test the $10,000 level at some point.” The euro rebounded to 1.41 against the dollar from a four-month low of 1.3834 on Tuesday, while equities rose despite further bad news on the eurozone debt crisis front, with rating agency Moody's cutting the Irish debt to "junk" status. The catalyst for the rally was the release late on Tuesday of the minutes from the June meeting of the Federal Open Market Committee (FOMC), which showed some Fed members were toying with the option of additional quantitative easing measures "if economic growth remained too slow" and employment too weak. Additional monetary policy stimulus would weigh on the dollar and create further inflationary risks while boosting activity growth, a typically bullish cocktail for commodities. Spot gold hit a new record high above $1,575 per ounce earlier today and light sweet crude oil is back above $98 per barrel. Some even more bullish news for metals emerged overnight from China, where second-quarter GDP growth matched expectations at 9.5 percent and industrial production in June proved stronger than forecast at 15.1 percent. "The [growth] figure suggests that the government has had some success in battling inflation without hampering growth," Fairfax said in a note. The broker expects further tightening measures in the second half of the year. "China has avoided a hard landing, which is good news for base metals," the LME trader said. COPPER TECHNICALLY VULNERABLE Copper rose to just below $9,750, close to a three-month high of $9,789.75 reached on July 8 and some three percent above yesterday's session low. It then pared gains to $9,690 but was still up $39. "Copper is looking to challenge Friday's high again," said Jono Remington-Hobbs of FastMarkets. A break above $9,789 would point to potential upside targets of $9,944-$10,190 while failure to pierce and close above that level in the coming sessions would send bearish signals, he added. LME-registered stocks rose a net 350 tonnes to 461,975 tonnes but cancelled warrants jumped 2,425 tonnes or 13.7 percent to 20,175 tonnes - a large tonnage was booked for removal in Gwangyang in what could be another inter-warehouse move. Lead remained in good form today, hitting a new high since April 13 at $2,771.75 before settling at $2,763, still up $30 from the prior close. Stocks dropped 1,300 tonnes to 307,350 tonnes. But cancelled warrants continued to fall in Singapore to 19,050 tonnes - out of a total figure of 19,225 tonnes - from a peak of 35,075 tonnes in June. Aluminium was flat, dropping $2 at $2,489 and marking time after recovering from a near-six-month low of $2,451 on Tuesday. Stocks dropped for the 35th straight session to 4,418,550 tonnes, their lowest since January 12. But overnight data showed that China's aluminium production increased 13 percent to 1.59 million tonnes in June, a third monthly record, from the same month of 2010. In other metals, tin extended Tuesday's 6.5-percent trough-to-peak increase and was last $100 higher at $27,250. Nickel rose $201 to $23,846 after stocks fell a net 252 tonnes, while zinc climbed $38 to $2,387 despite a 300-tonne stocks increase and a large 1,625-tonne drop in cancelled warrants mainly in Johor and Port Klang. Steel billet traded at $593 before settling at $585, unchanged from the prior close and close to Monday's six-month high of $600, even though stocks rose another 325 tonnes to 43,810 tonnes, a new high since May 18. Cobalt was quoted at a wide $34,000/44,100 after last trading at $35,000 on Tuesday, while molybdenum was stable at $32,100/36,500. (Editing by Mark Shaw)

Source