METALS-Copper holds 2-month high after bank stress tests

* Stress tests, an economic uncertainty, out of way

* Copper has best week since February; tin surges 6 pct

* Coming up: U.S. June housing starts on Monday
(Updates with New York copper price and analyst comments; adds NEW
YORK dateline/byline)

By Chris Kelly and Pratima Desai

NEW YORK/LONDON, July 23 (BestGrowthStock) – Copper prices extended a
rally into a fifth day on Friday, posting the largest weekly gain
since late February, as fund money piled into the market amid an
improving economic outlook, undisturbed by European bank stress test
results.

Seven of 91 European banks failed stress tests and showed an
overall capital shortfall of 3.5 billion euros, the organizers of the
tests said. [ID:nSGE66M07W] [ID:nLDE66M1UD]

“We are not seeing a huge reaction because the seven banks that
failed were not really that far out of line with market
expectations,” Peter Buchanan, commodities analyst and senior
economist at CIBC in Toronto, said.

“It’s not necessarily that the results were positive, but it’s
just one more item of uncertainty out of the way at this point,” he
said.

Copper for September delivery (HGU0: ) on the COMEX metals division
of the New York Mercantile Exchange ended up 2.05 cents at $3.1850
per lb, its highest level on a closing basis since May 13.

For the week, the September contract rose 8.7 percent, its
biggest gain since the week of Feb. 21.

Benchmark copper (CMCU3: ) on the London Metal Exchange rose to
$7,090 a tonne, its highest since May 14, before ending up $20 at
$7,030 a tonne.

“The fact that it’s held $7,000 is a good sign,” David Thurtell,
an analyst at Citi, said of copper after the stress tests results. “I
think Europe seems to have got through this euro zone debt crisis
relatively unscathed.”

Other metals followed copper’s lead. Tin (CMSN3: ) surged more than
6 percent to $19,750 a tonne, its highest since September 2008.
[ID:nLDE66M1P2] Aluminum, lead and zinc rose to $2,070, $1,983.75 and
$1,962 a tonne, respectively, their highest since May.

(Graphic http://link.reuters.com/hun72k)

BELLWETHER

While sentiment has taken a recent hit from some below-forecast
economic data and an “unusually uncertain” outlook earlier in the
week from U.S. Federal Reserve Chairman Ben Bernanke, copper has
remained as resilient as ever.

“Copper has shown these last few sessions that we are going to
have some better growth here over the next 60 to 120 days,” said
Frank McGhee, head precious metals trader at Integrated Brokerage
Services LLC in Chicago.

“Copper is doing what it should do. It’s being a bellwether,” he
said.

German business sentiment data reinforced that view, rallying in
July to its highest level in three years. [ID:nBEB004470]

Aluminum (CMAL3: ) was last quoted at $2,030/2,030.5 a tonne, down
from Thursday’s last bid at $2,044 a tonne.

The world’s top aluminum producer, Russia’s UC RUSAL (0486.HK: )
(RUAL.PA: ), said it had restarted operations at its Windalco Ewarton
alumina plant in Jamaica, which was mothballed in 2009 due to the
economic crisis. [ID:nLDE66M04E]

Zinc (CMZN3: ) ended down $38.50 at $1,910 a tonne. An explosion at
Horsehead Holding Corp’s (ZINC.O: ) zinc refining facility in western
Pennsylvania on Thursday killed two of its employees and halted
operations at the plant. [ID:nN23122223]

Lead (CMPB3: ) rose $39 to $1,979 a tonne, and nickel was last
quoted at $20,350/20,355 from $20,250.
Metal Prices at 3:25 p.m. EDT (1925 GMT)
COMEX copper in cents/lb, LME in $/T and SHFE in yuan/T
Metal Last Change Pct Move End 2009 Ytd Pct

move
COMEX Cu 319.25 2.80 +0.88 334.65 -4.60
LME Alum 2030.00 22.00 +1.10 2230.00 -8.97
LME Cu 7030.00 20.00 +0.29 7375.00 -4.68
LME Lead 1970.00 30.00 +1.55 2432.00 -19.00
LME Nickel 20375.00 125.00 +0.62 18525.00 9.99
LME Tin 19100.00 860.00 +4.71 16950.00 12.68
LME Zinc 1915.00 -33.50 -1.72 2560.00 -25.20
SHFE Alu 15275.00 230.00 +1.53 17160.00 -10.98
SHFE Cu* 55400.00 1470.00 +2.73 59900.00 -7.51
SHFE Zin 15885.00 285.00 +1.83 21195.00 -25.05
** Benchmark month for COMEX copper * 3rd contract month for SHFE AL,
CU and ZN
SHFE ZN began trading on 26/3/07

Investment Analysis

(Additional reporting by Rebekah Curtis in London; Editing by Walter
Bagley)

METALS-Copper holds 2-month high after bank stress tests