By: Eddie van der Walt

London 17/08/2012 - Base metals traded towards the top of their recent ranges in Friday morning LME trading, with sentiment buoyed slightly by European stimulus hopes triggered by comments from German Chancellor Angela Merkel.

"The base metals and bullion continue to oscillate sideways, mainly within recent ranges… having drifted since the end of last week, yesterday saw some pick-up," FastMarkets analyst William Adams said.

The metals followed equities higher - broad risk appetite received a boost from Merkel's comments that she backs the European Central Bank's (ECB) plans to save the euro.

Merkel is reported as saying she stood behind ECB president Mario Draghi's promise to do 'whatever it takes' to save the euro, thus raising prospects of further bond buying.

Her comments tempered bond markets, with Spanish 10-year yields dipping to 6.45 percent, while those of Italy retreated to 5.77 percent, making it more affordable for these embattled nations to service their debt.

Eyes will remain fixed on the US, however, with some market participants speculating that Federal Reserve chairman Ben Bernanke will announce further stimulus at the bank's Jackson Hole meeting in September.

"Overall, we would expect more range trading in the short term; should more QE be announced, that could see prices run higher but overall we feel the danger still lies to the downside over the medium term so we expect rallies to attract selling," Adams said.

In data released so far this morning, the German producer price index was flat - it had been expected to climb to 0.4 percent from its previous reading of minus 0.4 percent. The eurozone current account registered a surplus of 12.7 billion euros during June, an improvement on the expected number of 7.8 billion euros.

Expected later today is US preliminary consumer sentiment data from the University of Michigan, which is expected to come in at 72.5, up from 72.3 previously.

In currencies, the euro gained 0.0017 on the dollar, taking it to 1.2372/1.2373, with the US dollar index at 82.37, down 0.03.

Oil retreated further from its three-month high above $115 set earlier in the week - it was last at $114.07, up 21 cents.


VLISSINGEN ALUMINIUM STOCKS CONTINUE TO RISE

Copper was last at $7,503.50 per tonne, up $54.50, with just more than 4,700 lots changing hands on Select by 10:30 BST. Inventories fell a net 700 tonnes to 234,550 tonnes, with 500 tonnes leaving St Louis and smaller amounts leaving Chicago and New Orleans. Cancelled warrants at 38,475 tonnes are 4,450 tonnes higher.

Aluminium was also higher, gaining $4 to $1,846 and rebounding further after hitting a three-year low at $1,827.25 yesterday. Volumes have been light, with about 2,375 lots passing through Select.

Stocks rose again, up 26,750 tonnes to 4,919,925 tonnes. After 30,350 tonnes arrived in Vlissingen, taking the total there to 1,246,450 tonnes, the location is rapidly gaining on Detroit where the largest stockpile is held. Cancelled warrants at 1,714,100 tonnes were 6,850 tonnes lower.

Lead was last at $1,865, up $18 on the close. Stocks fell 1,650 tonnes to 319,200 tonnes - Bilbao saw an outflow of 1,250 tonnes of material, with smaller amounts leaving Long Beach and Barcelona. Cancelled warrants jumped 21,925 tonnes to 55,650 tonnes.

Zinc has so far gained $18, taking it to $1,865. Stocks of the metal dropped 3,150 tonnes to 978,475, with outflows in New Orleans (1,575 tonnes), Port Klang, Malaysia (1,500 tonnes), and Chicago (75 tonnes). Cancelled warrants slipped 3,150 tonnes to 130,400 tonnes.

Tin is currently at $18,314, up $214. Reserves decreased by just 10 tonnes to 11,630, with cancelled warrants up 15 tonnes to 6,055 tonnes.

Nickel climbed $25 to $15,550. Warehouse stocks dropped 156 tonnes to 114,900 tonnes and cancelled warrants fell 168 tonnes to 14,184 tonnes.

Steel billet was last unchanged at $380/395 while in the minor metals cobalt was indicated at $28,638/29,990 and molybdenum was neglected.


(Editing by Mark Shaw)