Copper leads metals higher on positive US GDP data; nickel bucks trend

Fri, 30 Mar 2007 – Copper was higher, leading across-the-board gains in the base metals, as better-than-expected fourth-quarter US GDP data yesterday allayed fears of an economic slowdown in the world's largest economy.

Ongoing gains in crude prices, which rose to a six-year closing high yesterday on continued tensions in the Middle East, and reports of rising demand from China also underpinned gains, analysts said.

Nickel was the only metal to buck the trend, paring some of the steep gains it recorded this week.

At 12.36 pm, copper was up 104 usd to 6,870 usd per tonne, boosted by US data that showed fourth-quarter GDP in the world's second largest consumer of the metal rose 2.5 pct, against initial estimates of a 2.2 pct increase.

Unemployment claims in the US fell further than anticipated, to 308,000.

Fears over falling US demand have weighed on prices, analysts said.

'The concerns over demand from the US due to weaker economic activity, which weighed earlier on base metals, were blown away yesterday,' said Dresdner Kleinwort in a note.

'The upward revision of Q4 GDP growth changed sentiment and most metals could recover,' it added.

Copper is also benefiting from buoyant demand from China, its largest market, as well as from Europe.

Investment bank UBS noted earlier this week that copper looks poised for further gains this year on the back of a resurgence in demand for the metal and sharp draws on stockpiles which have tightened the supply-demand balance.

LME inventories of the red metal fell further this morning to 178,075 tonnes. Stocks of aluminium, zinc and tin also declined, while lead and nickel posted modest gains.

Nickel was the only faller amongst the base metals, posting losses of 325 usd per tonne to 43,750 usd.

The metal gained strongly this week, with concerns over low inventory levels continuing to boost prices even though supplies are picking up.

Tin, recovering from losses sustained over the last few days on profit-taking after recent strong gains, was 340 usd higher at 13,600 usd.

Aluminium was 15 usd per tonne higher at 2,795.50 usd, while lead put on 14 usd per tonne to 1,935 usd, approaching its all-time high. Zinc added 35 usd per tonne to 3,285 usd.