By: Kathleen Retourne

London 16/08/2012 - Base metals showed few signs of life in Thursday morning LME trading, stuck in current ranges and in low volumes while investors remain on the sidelines.

"Not much going on at the moment - there is a general lack of interest. People only have interest in the markets if they are moving one way or another," a trader said.

"Prices will follow knee-jerk moves on currencies and numbers [such as] jobless and housing data out of the US later this afternoon so don't expect markets to do much before then."

Metals gave up earlier gains from talk of further monetary easing in China while eurozone fears - particularly on Greece - and doubts about QE3 in the US weigh

Markets in Asia advanced after China's state television network quoted Premier Wen Jiabao as saying that low inflation had provided growing room for a monetary policy operation that would assist the country in reaching its 2012 economic and social development targets.

Since Wen rarely makes such direct comments on policy matters, analysts now expect the People's Bank of China to announce monetary easing measures in the coming days, most likely in the form of a cut to the reserve requirement ratio (RRR) or to interest rates.

"With the weekend looming we are on high alert for an RRR cut possibly on Friday evening," ANZ Commodity Research said.

Hopes for further US stimulus are on hold, however, after a string of better-than-expected data. Industrial production data, released yesterday, was up against the expected 0.5 percent and the revised previous month's 0.1 percent, at 0.6 percent.

"What counts at the moment is the 'real' economy and while certainly far from booming, this does not appear weak enough for the Fed to act," Credit Suisse said. "The key question for investors is whether it is strong enough to give equity markets another boost."

Over in Europe, the euro was soft at 1.2277 against the dollar on fresh eurozone concerns. Greece is once again causing headaches for investors after a report in the Financial Times suggested that the country's prime minister will call for a two-year extension on its austerity policy.

Data releases scheduled for Thursday includes July US building permits and housing starts, the August US Philly Fed manufacturing index and US weekly unemployment claims.

Earlier core CPI and CPI for the eurozone came in as expected at 1.7 percent and 2.4 percent respectively.


METALS MIXED

Aluminium is still in negative territory, down $2 on the previous day's close at $1,837 per tonne but off its session and 14-month low of $1,831. Volumes of 4,460 lots on Select so far have exceeded those of copper, at a very sluggish 3,980 lots.

Aluminium was the only metal for which stocks rose today, climbing a net 1,375 tonnes at 4,893,175 tonnes. Vlissingen and Rotterdam stocks were up 4,525 tonnes and 2,900 tonnes respectively.  Cancelled warrants at 1,720,950 tonnes, meanwhile, were down 8,750 tonnes. These stock movements will do little to provide support to ailing prices.

Copper initially peaked on Chinese stimulus hopes to $7,443.75 but failed to hold at this level - it slipped to $7,404.75, still up $19.75 on the previous day's close. Stocks dropped 1,125 tonnes to 235,250 tonnes but cancelled warrants inched up 525 tonnes to 34,025 tonnes.

"Sept/Oct fund rolls have finished and spreads have started to tighten. [We are] starting to see a bit of interest in the copper Sept/Dec spreads now," the trader said.

Zinc is back below $1,800 at $1,791.50, a $10.50 loss. After yesterday's considerable jump in stocks of 18,725 tonnes due to large increase in Johor, inventories fell 3,125 tonnes to 981,625 tonnes today after 1,500-tonnes drops in New Orleans and Port Klang, Malaysia.

Nickel at $15,351 was up $51. Inventories dropped to 115,056 tonnes, a 348-tonne decline, while cancelled warrants at 14,352 tonnes fell 324 tonnes.

The global nickel market was in a supply surplus of 56,000 tonnes in the first half of 2012, according to World Bureau of Metal Statistics data released yesterday.

"The high surplus could diminish somewhat in the second half of the year, as mines are likely to be shut down as a result of the sharp fall in the nickel price, which has shed around 30 percent from its interim high in February," Commerzbank said.

Output of nickel pig iron (NPI), which is produced exclusively in China, has been cut in half because the nickel price has fallen below the costs of production, it added. This is likely to stimulate higher demand for refined nickel, which should be reflected in higher imports and rising prices.

Lead at $1,834 was up $9 after inventories lost 275 tonnes to 320,850 tonnes and cancelled warrants increased 1,725 tonnes to 33,725 tonnes. Tin rose $89 to $18,139; stocks were unchanged at 11,640 tonnes and cancelled warrants at 6,040 tonnes were down 300 tonnes.

Steel is slightly softer at $375/400 while in the minor metalscobalt was indicated at $28,638/29,540 and molybdenum was offered at $26,500.


(Editing by Mark Shaw)