London 03/08/2011 - Base metals lost a little ground on the LME on Wednesday morning in thin trading volumes, with investor increasingly apprehensive about the outlook for global economic growth. Markets are increasingly cognisant of the possibility of a third round of quantitative easing (QE3) in the US after a deal to raise the country’s debt ceiling was agreed yesterday. This has hit global equities, has sent gold to a fresh all-time high above $1,670 per ounce and is also underpinning base metals to some extent, FastMarkets analyst William Adams said. “Given what is happening in equities, it seems as though the base metals are holding up well but we would not be surprised if they pull back further - the deteriorating economic outlook and move towards more austerity does not bode well for demand,” he added. European stocks fell across the board on Wednesday, extending recent losses - the benchmark Stoxx Europe 600 Index retreated 0.6 percent and is down 12 percent from this year’s high in February. New concerns about the eurozone debt crisis also strengthened demand for safe-haven assets - five-year Italian bond yields reached the same level as those of Spain and German bonds rose for the ninth day, while PMI data this week from the US, EU and China showing weak growth darkened the global economic growth outlook. Investors were also focused on the possibility of US credit rating downgrades - although Moody’s and Fitch affirmed their AAA ratings, they warned that downgrades are possible if lawmakers fail to enact debt reduction measures and the economy weakens, Bloomberg reported. The euro rose up to 1.4217 against the dollar from 1.4175 on Tuesday. Data out today includes EU, UK and US services PMI, EU retail sales, US factory orders and the start of a swathe of US jobs data with Challenger Job cuts and ADP non-farm employment change. Traders will watch Friday’s non-farm payrolls data closely for clues on whether the US economy is still struggling. Metals were mixed on Tuesday - tin put in the worst performance, falling 3.2 percent due to technical selling. It was last at $27,250 per tonne, flat from yesterday’s close. Copper was down $52.50 at $9,628.50 and close to an intraday low of $9,615, with stocks rising a minimal 225 tonnes to 465,850 tonnes. In supply news, a resolution seems to be in sight at Chile’s Escondida mine after striking workers suggested they would be willing to compromise with a smaller bonus payment. Aluminium was $14 lower at $2,569 after stocks maintained their routine downtrend, dropping a net 7,575 tonnes to 4,429,900 tonnes due to movements in a host of locations. Cancelled warrants also declined, falling 7,250 tonnes to 356,075 tonnes. Lead fell $13 to $2,548, Nickel was down $240 at $24,495 and steel billet was indicated at $590/595. Zinc traded at $2,418, down $22. Stocks rose 500 tonnes to 889,800 tonnes while cancelled warrants fell 925 tonnes to 112,950 tonnes. Cobalt was indicated at $35,000/37,500 and molybdenum at $30,500/36,500.

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