METALS-Base metals up as emergency aid lifts sentiment

* ECB euro zone govt bond buying helps restore confidence

* Industrial metals demand on road to stronger recovery

* Coming up: March wholesale inventory data Tuesday

(Updates with New York closing copper price, adds analyst
comments, New York dateline/byline)

By Chris Kelly and Michael Taylor

NEW YORK/LONDON, May 10 (BestGrowthStock) – Industrial metals were
broadly higher on Monday, driven by a $1 trillion emergency aid
package aimed at stabilizing broader markets and resolving the Greek
debt crisis that has threatened to sink the euro. [ID:nLDE64901W]

The deal, hammered out by European Union finance ministers,
central bankers and the International Monetary Fund in weekend talks,
was the largest in more than two years since G20 leaders pumped money
into economies after Lehman Brothers’ collapse. [ID:nSGE6490HH]

Copper for July delivery (HGN0: ) on the New York Mercantile
Exchange’s COMEX division jumped 8.35 cents, or nearly 2.7 percent,
to settle at $3.2280 per lb, near the upper end of its $3.1665 to
$3.2675 session range.

On the London Metal Exchange, benchmark copper (CMCU3: ) closed at
$7,120 a tonne from $6,940 on Friday.

The metal, used in power and construction, last week lost more
than 6 percent of it value, hitting lows of $3.0055 per lb and
$6,632.75 a tonne, their lowest since early February.

“The pullback that we saw was excessive, given the underlying
improvement in fundamentals that is going on,” Gayle Berry, an
analyst at Barclays Capital, said.

“This rebound is in line with the recovery you’re seeing in those
fundamentals,” she added. “Inventory trends are turning more positive
for most metals … we saw the physical markets really pick-up since
the price pullback.”

Bart Melek, Global Commodity Strategist with BMO Nesbitt Burns in
Toronto, agreed, saying that there were now few negative catalysts in
place likely to prevent a broad commodity rally.

“The U.S. employment picture is improving and credit across the
world should start flowing better,” Melek said in a research note on
Monday. “Global industrial production is still in its nascent stage,
with at least another year of strong recovery still to come, which
should continue to support commodity prices.”

On Friday, data showed U.S. employment grew at its fastest pace
in four years in April. [ID:nN06115059]

Another positive fundamental boost came from news that the
European Central Bank will buy euro zone government bonds to support
fractured markets. [ID:nLDE649051]

“There is a feeling that however much money you throw at Greece,
they might still think it’s in their best interests to partially
default or default. This (ECB news) makes it seem far less likely,”
Robin Bhar, an analyst at Credit Agricole said.


Many market participants fear demand from China, the world’s
largest consumer of industrial metals, will tumble as the country’s
government tightens policy to rein in price pressures.

Others think policy will not be tightened to the extent that it
significantly hits demand. They are not worried about a 4.4 percent
fall in April Chinese copper imports, after a 41.6 percent gain in
March. [ID:nTOE64908B]

“They are down only marginally … domestic prices do not favor
imports,” Bhar said.

For a graphic on the arbitrage, click:

Positive sentiment was further reinforced by the Chinese central
bank which said it would maintain appropriately loose monetary
policy. [ID:nBJA002251]

Another supporting factor is falling stocks of metal in LME

Copper stocks have fallen 64,200 tonnes since the middle of
February to 490,875, while aluminum stocks are down 134,525 to
4.5 million tonnes since a record high above 4.64 million tonnes hit
on January 21.

Aluminum (CMAL3: ) ended at $2,144 a tonne from $2,072.5,
zinc (CMZN3: ) at $2,139 from $2,091, tin (CMSN3: ) at $17,750 from
$17,600 and nickel (CMNI3: ) at $23,000 from $22,550 on Friday.

Lead (CMPB3: ) was untraded at the close but last bid at
$2,108 a tonne from $2,042.
Metal Prices at 1840 GMT
Metal Last Change Pct Move End 2009 Ytd Pct

COMEX Cu 321.30 8.20 +2.62 334.65 -3.99
LME Alum 2130.00 57.50 +2.77 2230.00 -4.48
LME Cu 7115.00 175.00 +2.52 7375.00 -3.53
LME Lead 2095.00 53.00 +2.60 2432.00 -13.86
LME Nickel 22900.00 350.00 +1.55 18525.00 23.62
LME Tin 17750.00 150.00 +0.85 16950.00 4.72
LME Zinc 2130.00 39.00 +1.87 2560.00 -16.80
SHFE Alu 15720.00 245.00 +1.58 17160.00 -8.39
SHFE Cu* 56620.00 2120.00 +3.89 59900.00 -5.48
SHFE Zin 16980.00 325.00 +1.95 21195.00 -19.89
** 1st contract month for COMEX copper * 3rd contract month for SHFE
AL, CU and ZN SHFE ZN began trading on 26/3/07

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(Additional reporting by Pratima Desai in London; editing by William
Hardy and Marguerita Choy)

METALS-Base metals up as emergency aid lifts sentiment