Sydney - Base metals traded on the London Metal Exchange rose in choppy Asian trading Monday, with copper breaking well above the psychologically important level of $7,000 a metric ton and tin at its highest levels since before the collapse of Lehman Brothers in September 2008. Traders cited generally thin trading and renewed optimism thanks to the positive outcome of Europe's bank stress tests Friday and positive economic data from Europe. At 0725 GMT, LME 3-month copper was at $7,072/ton, $43 above Friday's kerb trading, while aluminum gained $27 to $2,057/ton. A trader in Sydney warned that 3-month copper's pause around the $7,000/ton level early in the day--dropping from the open of LME Select at 0000 GMT to a $6,990/ton low around 0400 GMT--suggested a lack of conviction in the rally. "I thought when we snuck through $7,000/ton it would just keep going, but it's just been hovering around $6,990/ton level," he said. "I don't think we should be up here at all, we should be in $6,300/ton-$6,800/ton level." However, a trader in Shanghai said the move above $7,000/ton was flushing out some smaller copper investors, who were selling scrap into the market and depressing prices. "Some local distributors of scrap and trading houses have some high-cost stock which is coming in now, and that impacts the balance of the market." Traders also pointed to the lack of any significant arbitrage window between LME copper and the metal quoted on the Shanghai Futures Exchange, a traditional driver of Asian trade in the metal. The LME contract was only at a slight premium to Shanghai during the day, encouraging some selling from Chinese traders but little else. Industrial metals were also supported by a report in the China Securities Journal that the government would limit annual production of 10 nonferrous metals to a combined 41 million tons by 2015. Zinc rose $46 to $1,951/ton and lead moved above $2,000/ton for the first time since May 5, up $24 at $2,002/ton. Tin continued to climb on the back of Friday's 6% rally, gaining $160 to $19,650/ton, while nickel rose $450 to $20,800/ton. Copper, aluminum, lead, zinc, nickel, tin, antimony, magnesium, spongy titanium and mercury would all be limited by Beijing, the report quoted Shang Fushan, vice chairman of the China Nonferrous Metals Industry Association, as saying. The move up in most LME commodities tracked a general rise in regional stock markets, with Japan's Nikkei Stock Average up 0.9%, Australia's S&P/ASX 200 0.5% higher, South Korea's Kospi Composite up 0.4%, China's Shanghai Composite Index falling 0.5%, Hong Kong's Hang Seng Index climbing 0.2% and India's Sensex 0.1% lower. Key data points later in the day will be U.S. new residential home sales for June, the Chicago Federal Reserve's National Activity Index for June and the Texas Manufacturing Outlook survey for July.

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