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Most base metals close higher

Monday, Mar 12, 2012
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 ase metals closed mostly solidly higher on the London Metal Exchange Friday, buoyed by a strong US labour report and seemingly unrattled by another sovereign-debt rating downgrade for Greece.

 
 
At the PM kerb close, LME three-month copper traded at $US8,495 metric ton, up 2.0 per cent on the day, while aluminum was 1.6 per cent higher at $US2,240/ton. The majority of upward progress was made late in the LME session, once investors had time to digest a better-than-expected US nonfarm payroll reading.
 
 
Nonfarm payrolls rose by 227,000 in February, the US Labour Department said. This was stronger than the 213,000 forecast by economists surveyed by Dow Jones Newswires. The unemployment rate was 8.3 per cent, in line with forecasts.
 
 
Industrial metals are particularly sensitive to economic news and data due to their wide use in manufacturing and construction.
 
 
"The payroll reading bodes well for base metals, particularly coming after the weaker Chinese inflation figure, which suggested further stimulus and a possible reserve ratio cut again soon," said Rob Montefusco, senior commodities broker at Sucden Financial.
 
 
Data released early Friday revealed Chinese inflation fell to 3.2 per cent last month, from 4.5 per cent in January. As the world's top consumer of metals, economic indicators from China tend to be particularly closely eyed for demand signals.
 
 
Base metal markets appeared to shrug off news of a Greek sovereign-debt rating downgrade by Fitch Ratings Friday, which cut Greece's rating to 'restricted default' from 'C'.
 
 
"The Greece downgrade was expected," said Montefusco.
 
 
Last week, Moody's Investors Service downgraded Greece's rating to C, its lowest possible rating short of default. Similarly, Standard & Poor's Ratings Service cut Greece's long-term credit rating to selective default.
 
 
But while the mood of base metal investors was buoyant heading into the weekend, market participants will be keeping a close eye on Saturday's trade balance data from China, said analysts.
 
 
"Here we feel the risks are to the downside, which could spark an adverse reaction from base metals on Monday morning," said Marc Ground of Standard Bank.

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