London 11/10/2013 - Base metals were mostly higher in Friday's premarket when hopes of a short-term agreement over the US budget provided some tentative support.
House Republican leaders and President Barack Obama ended a 90-minute meeting at the White House Thursday night without a deal but their willingness to continue discussions gave markets the positive signal it needed to move higher.
"Ever since reports emerged yesterday that a compromise might be reached in the US budgetary dispute, the risk appetite among market participants has been growing; something that is also reflected in very firm equity markets," Commerzbank said in a note." This has been lending buoyancy to metal prices, with nearly all base metals making gains."
Parts of the US government closed down on October 1 after it failed to agree a 2013-14 budget.
"The initial White House reaction has been positive although the proposal does not address the issue of the government shutdown, which remains a major hurdle," MKS Capital said.
"We thought the base metals would see a relief rally if there was progress on the debt talks but so far, although prices are firmer, they have hardly reacted bullishly, unlike equities," FastMarkets analyst William Adams said.
The FTSE 100, the Dax and the CAC 40 were all in positive territory while in the US the Dow Jones was up around 2.2 percent.
In data, German final CPI for September came in as expected at 0.0 percent, while the German WPI at 0.7 percent beat the expected 0.5 percent. There is little data scheduled for the rest of the day and business could be directionless with the annual LME Week drawing to a close.
"LME trading is still rangebound inside fairly tight parameters with low turnover. Given the fact that LME dinner delegates are still in process of returning home, there is little prospect of any real direction being evidenced," Sucden said.
Next week could be volatile ahead of the October 17 deadline to raise the US debt ceiling or risk a potentially catastrophic default.
In the metals, copper was up $13 on Thursday’s close at $7,158 per tonne, although volumes remain fairly lacklustre - around 6,200 lots have changed hands on Select so far. Inventories fell for the 27th consecutive day, down a net 3,125 tonnes at 509,325 tonnes - the lowest since March 7.
Aluminium stepped back from above $1,880 to trade recently at $1,878, down $4. Stocks slipped 5,675 tonnes to 5,328,400 tonnes while cancelled warrants at 1,915,525 tonnes were down 6,925 tonnes.
Zinc gained $13 to $1,908 - stocks and cancelled warrants both fell 4,450 tonnes to 993,450 and 557,050 tonnes - while sister metal lead rose $23 to $2,098 despite no change to inventories.
Nickel was last at $13,801, up $51, after stocks fell 126 tonnes to 228,870 tonnes. Tin slipped $55 lower to $23,345 - there was a five-tonne drop in inventories to 12,830 tonnes.
Steel was indicated at $220/240, with no change to stocks, while cobalt and molybdenum were neglected.
(Editing by Mark Shaw)