By: Kathleen Retourne

London 25/10/2012 - Base metals reversed four days of negative trading on Thursday morning, scrambling back into positive territory, although sentiment remains cautious.

“A robust-looking euro is helping to consolidate prices right now and, with the Fed giving clear indication that the low interest environment is here to stay, this should help support prices,” a trader said.

The dollar, which had hit one-and-a-half-week highs of 1.2919 against the euro on Wednesday, eased back to stand around 1.3018 recently.

The outcome of the US Federal Reserve's two-day monetary policy meeting held few surprises - it made no changes to its plan to purchase $40 billion in mortgage-backed securities per month to stimulate growth, describing US economic growth as moderate due to sluggish job creation but better household spending.

Inflation has picked up recently due to higher energy prices but longer-term inflation expectations remain stable, the central bank added.

Metals initially picked up this morning in response to the FOMC statement and a better-than-expected Chinese PMI but pared gains after the release of negative EU data.

EU private loans fell for the ninth straight month in September to the lowest reading since October 2009 at -0.8 percent. M3 money supply has also fallen to its lowest since May 2012 at 2.7 percent.

“Yesterday's EU manufacturing and services PMIs in conjunction with this morning's data continue to suggest that growth in the EU is suffering in the fourth quarter, with austerity knocking confidence in the periphery and now, more importantly, in the core eurozone markets,” FastMarkets analyst Jono Remington-Hobbs said.

Elsewhere in the eurozone, investors are hopeful that Spain is set to request a formal bailout, although this has been on the cards for a while and progress has been slow, which is increasingly causing anxiety and capping gains.

Figures scheduled for release later today include weekly US unemployment claims, September US durable goods orders and September US pending home sales figures.


ANTWERP ZINC STOCKS RISE BUT STEEL INVENTORIES DROP

Copper at $7,868 per tonne was up $51 on the previous day’s close - it had touched $7,900 earlier - after inventories fell a net 3,650 tonnes to 218,700 tonnes due to drawdowns in Chicago. Cancelled warrants dropped 3,625 tonnes to 43,475 tonnes, however.

Zinc peaked at $1,874.50 but is now unchanged from yesterday’s close at $1,855. Stocks jumped again, increasing 35,950 tonnes to 1,114,925 tonnes.

Antwerp was responsible - stocks in this location rose 38,150 tonnes to 122,125 tonnes. There were no zinc stocks on warrant there at the start of October. Cancelled warrants at 367,425 tonnes were down 2,000 tonnes.

Aluminium was up a mere $0.75 at $1,938.75, stepping back from its intrday high of $1,954. Antwerp inventories climbed again, up 6,175 tonnes at 131,900 tonnes - they have risen 142 percent since the start of the month.

Total warehouse stocks were a net 1,050 tonnes higher, with Antwerp’s gains offset by drawdowns mainly in Vlissingen, New Orleans and Detroit. Cancelled warrants slipped 10,375 tonnes to 1,746,675 tonne

Lead at $2,016 was up $8 after stocks fell 1,100 tonnes to 309,875 tonnes and cancelled warrants rose 625 tonnes to 108,300 tonnes.

Nickel gained $60 to $16,450 even after inventories rose 804 tonnes to 128,718 tonnes and cancelled warrants at 10,872 were down 354 tonnes. Likewise, tin at $20,550 was up $275 despite a 20-tonne fall in stocks to 11,710 tonnes and a 410-tonne drop in cancelled warrants to 4,360 tonnes.

Steel billet was quoted at $334/357, with stocks in Antwerp – the largest holder - down 975 tonnes at 89,895 tonnes, taking the global total to 111,930 tonnes. In the minor metals, cobalt was indicated at $25,000/27,000 while molybdenum was offered at $25,000.


(Editing by Mark Shaw)