By: Kathleen Retourne

London 08/03/2012 - Base metals gained on Thursday morning, benefiting from a boost to sentiment in wider financial markets.

Equities and the euro were up, with the single currency currently at 1.3218 against the dollar, on hopes that the Greek debt swap deal with private-sector bondholders will go ahead as planned.

Fears that Greece may not be able to secure a deal with private creditors to reduce its debt have receded. It is increasingly unlikely that private bondholders will fail to meet today’s deadline to complete a swap of existing government bonds for new paper - two thirds of them must agree to participate for it to go ahead.

Short-term trends will remain at the mercy of eurozone developments and economic data releases.

“It’s a little bit steadier today,” the trader said. "Metals are very headline-fuelled at the moment. Markets have been running short and a bit of profit-taking has been seen.”

This week, the main focus is on the US employment picture - on Wednesday, the ADP Non-Farm Employment Change report for February showed that 216,000 jobs were added,  beating the forecast of 204,000 jobs.

“Tomorrow we have the initial jobless figure. Yesterday’s ADP number is used as an indication and that was positive, but conversely that increased the dollar and put further pressure on the markets yesterday. But there is an expectation that figures will be better, as overall the US has been posting good data,” a trader said.

Separately, the European Central Bank (ECB) is expected to hold interest rates steady at a policy meeting early this afternoon, while China will also release it producer and consumer price indices on the same day.

“There are rumours that China could see a rate cut - it’s only a rumour but could been seen after tomorrow’s [CPI and PPI] figures come out," the trader added.


ALL METALS IMPROVE

Aluminium at $2,232.50 per tonne was up $23.50 on the previous day’s close. LME warehouse inventories rose a net 10,050 tonnes to 5,098,325 tonnes, with 17,700 tonnes put on warrant in Vlissingen, taking stocks there to 1,018,800 tonnes.

Cancelled warrants were up a substantial 24,350 tonnes to 1,676,775 tonnes - Detroit’s cancelled warrants rose 23,925 tonnes to 597,700 tonnes, while Vlissingen’s cancelled warrants stepped slipped 1,500 tonnes to 896,400 tonnes.

Copper rose $116 to $8,411, while inventories continued to dwindle, losing a further 875 tonnes to 280,025 tonnes. But negating this figure was a drop in cancelled warrants to 91,475 tonnes, a decline of 2,900 tonnes.

Nickel at $19,183 is back above the pivotal $19,000 level and up $283 on Wednesday’s close. Stocks fell 108 tonnes to 97,926 tonnes but Dubai reported an increase of 132 tonnes of metal, taking its total stocks to 762 tonnes. Cancelled warrants at 5,220 tonnes were down 180 tonnes

“Up a good 1.5 percent, nickel has been the biggest winner. That said, nickel – a metal which is used primarily in the stainless steel industry – has also suffered the biggest losses over the past four weeks,” Commerzbank said.

Zinc was also around 1.5 percent higher at $2,046, a rise of $31. Inventories were down 25 tonnes to 866,900 tonnes, cancelled warrants were also down 25 tonnes at 17,775 tonnes.

Sister metal lead performed even more strongly - at $2,140 it was up $50. Stocks are now at their lowest since January 31, falling 525 tonnes to 363,425 tonnes. Cancelled warrants at 22,125 tonnes were down 350 tonnes.

Tin was almost three percent higher at $22,901, an increase of $651. Inventories were up 85 tonnes to 11,545, while cancelled warrants rose 10 tonnes to 1,355 tonnes.

Steel was quoted at $520.50/530 after a 3,640-tonne reduction in inventories in Rotterdam which took total LME stocks to 65,585 tonnes, the lowest since November 28

In the minors, cobalt stocks were down three tonnes at 287 tonnes, with prices indicated at $30,000/31,500. Molybdenum was neglected.


(Additional reporting by Martin Hayes, editing by Mark Shaw)

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