By: Martin Hayes

London 02/08/2012 - Base metals were unable to sustain early modest gains during Thursday LME premarket trading, with the complex glued around little-changed levels and copper not far off a one-week low.

"This morning’s moderate price recovery may be resting on rather shaky foundations, especially if the ECB fails to live up to the market’s expectations," broker Commerzbank said.

The metals complex has reverted to a cautious 'wait-and-see' attitude ahead of key European monetary policy meetings early this afternoon. The main focus will be on the ECB but the UK BoE is also meeting. In other markets, equities were generally little changed, while the euro held around a steadier 1.2270 against the dollar.

"It is still a waiting game ahead of central banks - growth seems to be stalling and again the 'junkies' await their fix," a trader said.

Late on Wednesday, the US FOMC said it would keep interest rates exceptionally low through to at least late 2014, dampening down hopes for a bolder plan to prop up the US economic recovery, such as a third round of quantitative easing.

Now attention swings towards the ECB rate meeting early this afternoon, where markets anticipate that ECB president Mario Draghi could take further action to tackle the eurozone crisis, such as intervening in bond markets to reduce borrowing costs for Italy and Spain.

As well as the ECB, the UK BoE may well reduce already-low interest rates even further. Ahead of these meetings, the euro was holding at a steady 1.2245 against the dollar.

On the economic data side, PMIs this week in China, Europe and the US have failed to match expectations but positive ADP private-sector employment figures on Wednesday may herald a better outcome from Friday's July US non-farm jobs report - the week's keynote data event.

Data releases scheduled for Thursday include the June eurozone PPI, July US Challenger job cuts, June US factory orders and weekly US unemployment claims.


COPPER SETS ONE-WEEK LOWS

Copper dipped to $7,419 per tonne at one stage and then held at $7,435, a $10 advance from the Wednesday close, having initially traded around $7,475. Inventories recorded a net 1,825-tonne inventory decline to 246,800 tonnes - the fourth day in a row that stocks have fallen.

Zinc was unchanged at $1,820 but stocks fell for the sixth day in a row - down 2,450 tonnes at 994,675 tonnes. There was also a 9.6-percent jump in cancelled warrants to 162,950 tonnes due to a 15,225-tonne cancellation in New Orleans.

The location now accounts for two thirds of the zinc booked for removal, with a queue in place to take delivery.

In other metals, aluminium eased $2 to $1,859 - inventories were down 7,525 tonnes at 4,870,900 tonnes. Lead traded at $1,880, a $4 loss, while inventories rose 2,075 tonnes to 328,850 tonnes.

Nickel was $40 higher at $15,590, with a 306-tonne stock fall seen. Tin was $40 higher at $17,840, with a modest 15-tonne fall in stocks to 11,725 tonnes.

Steel billet was indicated at $381/420, while in the minors cobalt was slightly lower at $27,500/29,500 and molybdenum was neglected.


(Editing by Mark Shaw)