By: Kathleen Retourne

London 02/10/2012 - Base metals were higher on Tuesday morning, reacting to currency movements in holiday-thinned trading

With the euro climbing back above 1.29 against the dollar before settling back - it was last at slightly firmer at 1.2893, up 0.0003 - nickel, lead and tin have enjoyed good start to the day. Tin hit its highest in five months, nickel its highest since March and lead an eight-month high.

Trading was much thinner than normal due to the absence of most Chinese participants for the Golden Week national holiday - markets there are set to reopen on October 8.

The improvement in sentiment began yesterday after European Commissioner Olli Rehn said Spain would probably receive its pre-agreed banking bailout fund by November, which in turn provided the euro with some lift.

In data released so far, Spanish unemployment increased by 79,000 in September, up from 38,200 in August, while the August European PPI came in at 0.9 percent, up from 0.4 percent.

"This week is likely to be volatile," ANZ warned in a note. "The Chinese holidays, and host of risk events including news flow on Spain, a number of central bank policy meetings, and key data in the form of US non-farm payrolls on Friday, will make for choppy trade."

Meanwhile, the Reserve Bank of Australia cut interest rates to a three-year low of 3.25 percent on concerns that the country’s resource sector, the driving force of its economy, could shrink.  

ALL METALS MOVE UP

Aluminium at $2,132 per tonne was up $6 on the previous day’s close. Stocks rose 9,325 tonnes to 5,059,100 tonnes, with an 18,550-tonne increase in Vlissingen lifting the total there to 1,283,200 tonnes.

Rotterdam stocks climbed 2,975 tonnes to 606,250 tonnes while New Orleans fell 5,050 tonnes. Total cancelled warrants dropped 15,050 tonnes to 1,569,975 tonnes, with falls in New Orleans, Vlissingen and Detroit.

Copper hit at a session high of $8,343 and was last at $8,334.75, still up $35.25. Trading was exceptionally quiet - just 2,800 lots have changed hands on electronic platform Select so far today. In spreads, Oct/Nov is in a backwardation of $1.

Inventories at 224,150 tonnes were up 650 tonnes after a 1,100-tonne increase in New Orleans. Cancelled warrants rose 4,850 tonnes to 44,100 tonnes; of this total, 24,875 tonnes or 56 percent are held in New Orleans.

Nickel is trading around six-month highs - it was last up $141 at $18,871 but off its earlier peak of $18,900. Inventories were down 216 tonnes at 123,858 tonnes, while cancelled warrants at 16,314 tonnes were 654 tonnes lower.

Zinc gained $17 to $2,126 despite a 6,125-tonne stock rise due to increases in New Orleans, taking total inventories to 995,625 tonnes. Cancelled warrants lost 1,450 tonnes to 356,425 tonnes.

Lead at $2,320 was up $28 after it earlier hit its strongest since January 27 at $2,329. While stocks fell 3,100 tonnes, cancelled warrants were down 3,000 tonnes to 76,450 tonnes.

Tin at $21,950 was up $100. It earlier peaked at $21,980, its highest since May 4, while in nearby spreads Oct/Nov is showing a backwardation of $15. Inventories were down 290 tonnes to 11,965 tonnes, while cancelled warrants dropped 300 tonnes to 6,045 tonnes.

Steel was soggy at $330/365 after a 715-tonne decrease in stocks and cancelled warrants in Chicago. Total stocks now stand at 52,650 tonnes and cancelled warrants at 16,640 tonnes.

In the minor metals, cobalt was indicated at $27,300/30,500 and molybdenum at $23,000/24,500.


(Additional reporting by Perrine Faye, editing by Mark Shaw)