LME MORNING - Base metals rise, breach technical levels on bullish data

By: Kathleen Retourne

London 09/08/2013 - Base metals built on the previous day’s gains on Friday morning after digesting a slew of Chinese economic data.

“Prices are continuing to find strength, underpinned by bullish data from the Far East suggesting economic conditions are stabilising there,” a trader said. “Short-covering stops have been elected on all metals, which may prompt further follow through buying from technical players if prices can hold onto current momentum.”

“A break above yesterday's highs would surely help push the metals higher. Taking this into account, we support the notion that base metals might seek higher prices from both fundamental and technical perspectives,” FastMarkets analyst Jono Remington-Hobbs said.

Chinese industrial production at 9.7 percent beat expectations of 9.0 percent but retail sales at 13.2 percent undershot the forecast of 13.5 percent. Fixed asset investment came in as expected at 20.1.

Chinese CPI was down at 2.7 percent but was unchanged from the previous month. PPI at -2.3 percent was lower than the expected -2.0 percent.

French industrial production at -1.4 percent was considerably lower than the expected 0.3 percent but the euro shrugged off these numbers, holding around 1.3384 against the dollar

With little more data set for release, markets are expected to react to currency movements for the rest of the day. Additionally, markets are closed in Singapore, Malaysia, Indonesia and the Philippines.

Copper at $7,227 per tonne was up $42 on the previous day’s close and back around two-month highs. Volumes have been fairly steady - some 9,150 lots changed hands on Select by 10:30 BST. Stocks fell for an 18th consecutive day to 594,500 tonnes and cancelled warrants were down a net 2,750 tonnes at 313,475 tonnes.

Aluminium at $1,861 was also up $21 - has now broken above its 100-day moving average (DMA) for the first time since June 10. Stocks dropped 8,125 tonnes to 5,463,350 tonnes and cancelled warrants fell 7,900 tonnes to 313,475 tonnes.

Zinc rose $35 to one-month high of $1,930, breaking above its 100 DMA for the first time since March 13. A notable 8,030 lots have changed hands on Select so far. While stocks fell 1,075 tonnes to 1,047,875 tonnes, cancelled warrants jumped 16,650 tonnes to 615,575 tonnes

Sister metal lead was up $26 at $2,166 following a 550-tonne drop in both stocks and cancelled warrants to 199,275 tonnes and 104,975 tonnes respectively.

Nickel at $14,482 was up $152 after stocks fell 84 tonnes to 204,024 tonnes. Tin rose on technical short-covering - at $22,190, it was up $490 and close to four-month highs.

Steel was indicated at $140/200 - stocks and cancelled warrants both fell 975 tonnes to 39,130 tonnes and 24,830 tonnes respectively. In the minors, cobalt and molybdenum were neglected.

(Editing by Mark Shaw)