Metal markets a positive sign

Copper settled a touch lower on Friday, consolidating after nine-month highs and a 4 percent gain on the week, but strong investor confidence in the economy means the rally is not over, analysts said. 'You are certainly in an environment where there is that assumption that the economy is turning around, said David Meger, managing director at Alaron Metals Services in Chicago. 'Interest rates remain low and the dollar remains under pressure, which is conducive to a commodities rally.' 'The market is looking down the road at this point in time (but) if things do not turn out that way and we turn around ... you are going to see at least a consolidation and a decline in these copper prices.' US copper futures for September settled down 0.20 cent, or 0.08 percent, at $2.5220 a lb on the New York Mercantile Exchange's COMEX division. On the London Metal Exchange, copper for delivery in three months ended down $10 at $5,520 a tonne. The lower close came after the metal used in construction and power generation hit nine-month highs in both New York and London, touching $2.5440 a lb on COMEX and $5,575 a tonne on the LME. Traders said the market was bolstered in early trading by a weaker dollar, improved euro zone services and manufacturing data, as well as a better-than-expected German sentiment survey. But a hefty quarterly decline in UK GDP and a weaker U.S. consumer confidence for late July -- as indicated by the Reuters/University of Michigan consumer survey - set the stage for a mild consolidation. Copper prices have surged 80 percent this year due in part to a vast buying exercise from fast-growing China, the world's top copper consumer. Analysts believe Chinese demand will keep underpinning prices while investors wait for western economies to recover. But some said they were already looking beyond China for growth. 'In my opinion ... China bought beyond their consumption levels (and) I have looked past Chinese news to outside market forces,' said Michael Maniatis, market strategist at Chicago's LaSalle Futures Group. 'I believe copper prices (will) run to $2.75/lb in the near term,' Maniatis said, adding that a raft of U.S. macroeconomic data due next week -- from fourth-quarter GDP to sales of new homes and durable goods -- will determine if the market tests that psychological resistance. Aside from copper, aluminium was another base metal that attracted strong investor interest on Friday, touching 8-month highs. Aluminium, used in transport and packaging, closed up $30 at $1,807 after inventories of the metal fell 1,125 tonnes to near 4.6 million tonnes. Copper stocks at LME warehouses rose 2,225 tonnes to 273,950 tonnes, their highest in a month. Stocks have risen since mid-July, reversing this year's trend of declines. But analysts attribute this rise to a temporary, seasonal lull in demand. Zinc closed at $1,692 from $1,699 on Thursday. Earlier it hit $1,720, matching a near 10-month high from June 11. Battery material lead touched its highest point since June 12 at $1,781.75. It closed at $1,750 a tonne from $1,745, while nickel closed at $16,750 from $16,400. Nickel earlier hit a 10-month high of $16,750 as rose as high as $16,800 in after-hours trading. Tin closed at $14,550 a tonne from $14,490. Tin traded in backwardation of $255, a premium for cash tin over the three-month contract. Traders remain concerned about the scale of long positions in the tin market compared with the amount of available metal in LME warehouses.