By: Martin Hayes

London 09/10/2012 - Base metals trended lower during Tuesday LME pre-market trading after early steadiness faded in the face of a more-cautious tone, highlighted by global economic growth downgrades by the IMF, a softer euro and general pessimism, traders said.

"It is disappointing - China came back yesterday and there was a sell-off, and we continue to trade off headlines, central banker and government comments - the IMF as well," one said.

The IMF said the global economic slowdown was worsening, cutting its growth forecasts for the second time since April. It said global output in 2012 would grow just 3.3 percent, down from a July estimate of 3.5 percent.

This will be the slowest year of growth since 2009; the IMF also forecast only a modest pick-up next year to 3.6 percent, below its July estimate of 3.9 percent.

"We get QE3 but that just goes to show that things are in a bad way... The fundamentals are very poor for base metals but prices are high - we have to be cautious of a big washout," the trader said.

The start of the US third-quarter earnings season later today, pending US and Chinese economic releases and key eurozone meetings this week also inhibited interest. Equity markets were tailing lower as well, while the euro slipped back from initial levels near 1.3000 against the dollar to some 1.2925.

Eurozone finance ministers said on Monday that Spain did not need a bailout yet while the country was successfully funding itself in the financial markets. Meanwhile, international lenders gave Greece a deadline of October 18 to implement new economic reforms in exchange for new financial assistance.

But caution remained ahead of what most investors anticipate to be a weak earnings season. The world's largest aluminium producer, Alcoa Inc, is, as always, the first to report on quarterly results, which are expected to show a net loss for the second quarter in a row.

In China, September data on new bank loans and money supply are due on Wednesday, followed by September trade data on Saturday. On the US front, the Fed "Beige Book" for September is scheduled for Wednesday, while the September PPI and October Michigan consumer sentiment readings are due on Friday.


COPPER STALLS BELOW $8,200, ALUMINIUM AND ZINC SET NEW LOWS

Copper eased back from earlier levels above $8,200 to trade at $8,174 per tonne, down from Monday's $8,180/8,185 close. It hit a one-week low of $8,128 on Monday, well below Friday's peak of $8,350, after China's return from a week-long holiday failed to prompt fresh buying.

Warehouse stocks fell a net 1,450 tonnes to 221,050 tonnes. In the spreads, cash/threes traded at $3.50 contango, while Oct/Nov business was level - tightness is centred on the October 'third Wednesday' prompt date, which trades as cash next Monday.

Aluminium hit $2,064, a fresh one-week low and an $18.50 loss - inventories rose 9,650 tonnes to 5,034,000 tonnes, with 15,050 tonnes put on warrant in Vlissingen.

Zinc dropped to a new three-week low of $2,028, a $7 decline. Stocks jumped 5,275 tonnes to 1,001,500 tonnes, the highest since July 30, due to a 6,825-tonne warranting in New Orleans.

Lead business at $2,253 was down $7 although the well-established inventory downtrend continued. Stocks fell for the 23rd successive day, with a 3,500-tonne fall bringing the stockpile down to 247,850 tonnes, a fresh low since January 2011.

Nickel at $18,068 was down just $2, with stocks falling 264 tonnes to 124,248 tonnes. Tin eased $60 to $22,040 - inventories were unchanged at 12,175 tonnes for the second day in a row.

Steel billet was indicated at $350/370, while in the minors cobalt was quoted at $27,300/29,000. Molybdenum was neglected.


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