By: Royston Wild London 06/06/2011 - Base metals remained anchored in positive territory in Monday morning LME business in Europe, underpinned by renewed weakness in the dollar and healthy bouts of bargain-hunting after poor US jobs data on Friday increased expectations of further stimulus measures being introduced there. Copper - which had struck a trough of $8,932 per tonne in volatile trade on Friday following the bearish US jobs news - remained upbeat and was last at $9,178.50, up $79.50. Following on from a slew of negative datasets in recent weeks, US non-farm payrolls for May showed just 54,000 jobs added, well below an expected 161,000, while the previous month's figure was also downgraded to 232,000 from 244,000. US unemployment rate numbers also underwhelmed, although ISM non-manufacturing PMI was cheerier. "The data raised prospects for lower interest rates for a longer period, while the accompanying weaker US dollar was also supportive for base metals," ANZ said. But, with the macroeconomic picture remaining bleak, the complex remains vulnerable to further heavy corrections despite current strength, analysts said. "The metals remain in downtrends and the economic weakness supports our view that metal prices are likely to pull back further," analyst William Adams of FastMarkets noted. "We would expect the deteriorating fundamentals to cap the upside and lead to further hedge selling and long liquidation before too long. We would watch the charts for likely turning points," he added. In data this morning, Sentix investor confidence numbers came in at their worst since August 2010 at 3.5, well below an expected 9.4 and falling from 10.9 previously. European PPI hit a three-month high in May, rising 0.9 percent against an expected 0.8 percent, while the previous figure was upgraded fractionally to 0.8 percent. No other notable releases are scheduled today, although statements from FOMC members Fisher and Plosser, and Treasury Secretary Timothy Geithner, will be closely watched in light of the deteriorating economic picture. In metals news, copper giant Codelco announced that production at El Teniente - the world's largest underground copper mine - has slowed to around 40 percent of capacity amid ongoing industrial action. This has helped to give metal prices an additional boost. In broader markets the euro edged up to its highest since May 5 at 1.4659 against the dollar, rising after Eurogroup chief Jean-Claude Juncker stated that the EU is set to approve a fresh aid package for Greece, while the US currency was pressured by the recent waves of patchy data. The European common currency was at 1.465. Major European stock markets fell 0.1-0.4 percent, while US futures were mixed around parity. COPPER STOCKS HIT NEW ONE-YEAR HIGHS A mixed LME inventory report showed copper stocks rose a net 2,225 tonnes overnight to 475,700 tonnes - the highest since late-May of last year - while cancelled warrants dipped 750 tonnes to 18,900 tonnes. Zinc inventories jumped 12,850 tonnes to 866,875 tonnes, the highest since June 1995, with large inflows seen in New Orleans possibly indicating further financing deal activity. Prices had ascended to levels not seen since April 26 at $2,315 earlier, boosted by last week's news that clearing house LCH. Clearnet had lowered the margins for zinc and zinc mini contracts on the LME to $210 per tonne from $240. Zinc was last at $2,296, $38 higher. Aluminium stocks dropped 7,425 tonnes overnight to 4,673,450 tonnes. Cancelled warrants rose 15,125 tonnes to 529,775 tonnes - a fresh record high - with hefty warrantings seen in Busan. Business at $2,662 was up $25. Lead stocks fell 775 tonnes to 323,050 tonnes - they had reached their highest since February 1995 at 323,825 tonnes on Friday. At $2,497.75, lead was $65.75 higher. Nickel - which had collapsed to its cheapest since May 24 at $22,350 on Friday - rose $189 to $22,989. Tin gained $50 to $26,450 per tonne - it had nosedived to its lowest since December 16 at $25,610 in the previous session. Steel billet was indicated at $555/569, down $5. Cobalt was offered at $39,500, while molybdenum was quoted at $35,000/37,500. (Additional reporting by Clara Denina and Gregory Holt. Editing by Martin Hayes)

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