LME copper rallies; lead and zinc up 5 %

Stronger equity and credit markets and a strike in Mexico helped copper prices rally on Tuesday, while lead and nickel both bounced by 5 percent. Rising investor confidence and positive output news from copper miners Kazakhmys and Antofagasta helped the Dow Jones basic resources index rise by more than 3 percent. Copper, used in the power and construction industries, for three-month delivery on the London Metal Exchange was at 1042 GMT quoted higher at $7,960/7,980 a tonne from $7,825 on Monday. Earlier, it hit a session high of $7,975. "Some limited semblance of order returned to credit and equity markets, driving the performance in metals markets," said John Reade, analyst at UBS. "Exogenous factors are going to remain key -- not supply or demand, but whether credit markets continue to falter or not." Traders said a strike at Grupo Mexico's giant Cananea copper mine in northern Mexico helped copper. Union workers at the mine walked out on Monday after London markets closed, although the mine continued operating as another group of workers was against the strike. Metals markets are waiting for key data on manufacturing and inflation in the United States later on Tuesday. "The more robust the economic data, the less likely that this credit/liquidity crunch will continue to persist," JPMorgan said in a research note. Triggers Lead broke above the psychological $3,000 a tonne level to a peak of $3,085 a tonne. The metal used in batteries was last at $3,060/3,080 a tonne from Monday's $2,907 a tonne. Lead is more than 80 percent above the level seen in January and less than $500 from the record high of $3,500 set earlier this month. This year's surge was triggered by concerns about supplies from Australia and China. "Lead stocks remain low and prices have proven to be unstable at this level of inventory," Morgan Stanley said in a research note. Stocks of lead in LME warehouses stand at around 39,000 tonnes, less than two days global consumption. Nickel surged 5 percent to $31,700 a tonne and was last at $31,500/31,700 a tonne from Monday's $30,200, about $20,000 below the $51,800 record high set on May 9. Prices have fallen on expectations that demand from stainless steel makers, which account for two-thirds of global nickel demand, was in decline. But traders said the sell-off had been overdone and that speculators buying back contracts they had sold -- short positions -- on the expectation of lower prices, could push prices higher. Aluminium was at $2,765/2,770 from $2,758 on Monday. Rexam Plc, the world's biggest drinks-can maker, posted on Tuesday an expected fall in first-half profits, due to higher aluminium costs and a weak dollar. In other industry news London-listed copper miner Kazakhmys Plc said on Tuesday its first-half copper cathode output rose 2 percent to 190,428 tonnes but second-quarter production fell due to maintenance work at its smelters. Chilean copper miner Antofagasta Plc said its second-quarter copper production rose from the previous quarter, with lower group cash costs on improved by-product credits. Tin was at $16,450/16,650 a tonne, down from an earlier new record high $16,600 and compared with Monday's close at $16,050. Zinc was at $3,545/3,555 from $3,470.