London 09/07/2012 - Base metals were mixed during Monday LME premarket trading, with an early tentative bounce stalling, due to softer financial sector sentiment and with the euro threatening a test of Friday's two-year lows.
"It is flat, unexciting and a bit wait-and-see. Nothing has changed much in the big picture," a trader said.
Sentiment remains tilted to the downside, with a choppy week in prospect given a mix of Chinese economic figures and US second-quarter earnings results.
Today, Chinese inflation data undershot - the CPI came in at 2.2 percent, a 29-month low, against May's 3.0 percent, which does suggest there is scope for further interest rate easing. The Chinese central bank unexpectedly cut rates last week.
The euro was slipping back under 1.23 against the dollar again, having slid to two-year lows of 1.2258 on Friday. It was around 1.2275 while eurozone finance ministers meet to discuss key elements of the accord reached at the June 28/29 EU summit.
In the short term there is little upside enthusiasm in the metals complex, given the jolt to confidence after Friday's US employment figures. Non-farm employment data for June showed that 80,000 jobs were added, well below the predicted 97,000.
This negated the impact of last week's monetary easing, with prices now set to struggle over the summer period. A flurry of central bank interventions last Thursday could be seen to suggest global economic growth is taking longer than expected.
"Investors seem to have given a pretty decisive response to rate cuts as the feel-good factor has been short-lived," another trader said.
For the metals, this week sees further Chinese trade figures, including GDP, at the end of the week.
"The focus of market players is now likely to turn to the preliminary Chinese trade figures for June, due to be published tomorrow morning. In May, China had already imported surprisingly high volumes of metals into the country," broker Commerzbank noted.
Markets will also be influenced by the start of the US second-quarter earnings season, which will kick off later today with aluminium producer Alcoa.
COPPER HOLDING ABOVE TWO-WEEK LOWS
Copper was trading at $7,526 per tonne, down $4 from Friday's close but managing to hold above early lows of $7,486.25 - the weakest since June 29. Inventories declined by a net 1,100 tonnes to 253,350 tonnes.
Aluminium inched back above $1,900 to trade at $1,902, a $7 gain, but stocks jumped 10,125 tonnes to 4,828,850 tonnes due to a 20,050-tonne warranting in Vlissingen. This queue-hit location now holds 1.09 million tonnes or 22.5 percent of the stockpile, with Detroit's 1.4 million tonnes accounting for 29 percent and a similar long queue.
Zinc was just $2 higher at $1,845 - inventories fell 2,700 tonnes to 988,150 tonnes, matching a similar fall in cancelled warrants, which are now at 200,050 tonnes. A run of withdrawals has seen cancellations drop 9,125 tonnes from last week's all-time highs.
In other metals, lead traded at $1,858, down $2 - there was a 1,150-tonne stocks fall to 347,325 tonnes. Nickel business at $16,275 was up $125, although inventories climbed 1,206 tonnes to a one-month high of 105,060 tonnes, due to arrivals in Asian stores.
Tin was up just $80 at $18,580, with stocks down 150 tonnes at 12,585 tonnes. Steel was indicated at a little-changed $400/420, while in the minors cobalt was quoted at $27,000/30,000 and molybdenum was neglected.
(Editing by Mark Shaw)