By Arpan Mukherjee Of DOW JONES NEWSWIRES WELLINGTON (Dow Jones)--Base metals were trading mixed in thin volumes on the London Metal Exchange in Asian hours Thursday, as markets remained jittery ahead of an Italian long-dated debt auction later in the day. At 0456 GMT, LME three-month copper was at $7,416.50 a metric ton, down $47.50 from its previous close, but off an intraday low of $7,381.50/ton early in the session. As long as physical demand is conspicuously low with most traders taking year-end holidays, the direction of the euro will dictate price trends in base metals, a Hong Kong-based trader said. A rise in the dollar can hit dollar-denominated commodities by making them appear more expensive to holders of other currencies. The euro dropped below $1.30 Wednesday amid concerns over European debt. It was last trading at $1.2929, just off the late New York level of $1.2940. "Base metals have come under pressure amid trepidation about the strength of the global economy," Standard Bank analyst Marc Ground said in a note. He also said, "concerns over copper demand were heightened after the S&P/Case-Shiller index of U.S. home prices fell by more than expected." The index of home prices in 20 major U.S. cities showed a year-on-year decline of 3.4% in October. However, base metals could get a boost if China eases its banking reserve-requirement ratio in early January, the Hong Kong-based trader said. The state-run China Securities Journal said China may cut the RRR to bolster the economy. Any easing of credit could help to boost construction demand for copper, supporting prices. In aluminum, physical demand remained soft compared with earlier in the month, but demand outside China has started firming since Wednesday, Harbor Intelligence said in a note. The annualized surplus of the metal was 929,000 tons in China and 900,000 tons in the rest of the world, or RoW, it said, indicating the market is tightly balanced. The following are LME three-month base metal prices at 0456 GMT and changes from the previous PM kerb: LME 3-Mo Last Change %Change Prev PM Close Copper $7,416.50 -$47.50 -0.6 $7,464.00 Aluminum $1,998.50 -$0.50 -0.03 $1,999.00 Lead $1,961.50 +$2.50 +0.1 $1,959.00 Nickel $17,922.00 +$22.00 +0.1 $17,900.00 Tin $18,900.00 +$325.00 +1.7 $18,575.00 Zinc $1,822.00 +$12.00 +0.7 $1,810.00 -By Arpan Mukherjee, Dow Jones Newswires; 64-4-471-5990; arpan.mukherjee@dowjones.com

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