London 24/01/2012 - Base metals were largely higher during Tuesday LME premarket trading, with some extending yesterday's advances and setting fresh multi-month highs on follow-through momentum.
But there were signs of resistance emerging and gains were pared - copper, for example, eased back just below Monday's close amid technical resistance and profit-taking.
"There is short-covering in the currencies and there is short-covering in the metals and that has been feeding on itself," a trader said.
Although prices have staged several sessions of gains - January is often a month when there is a bullish push in metals - macroeconomic news offered little joy after talks on a Greek debt swap deal stalled late Monday.
Eurozone finance ministers rejected as insufficient an offer made by private bondholders to help restructure Greece's debts, sending negotiators back to the drawing board.
Trading volumes remained extremely thin due to the Chinese New Year holiday - markets are closed for the whole week in China and for a few days in other Asian countries such as Singapore and Malaysia.
"After better-than-expected economic numbers recently, expectations have improved, making further positive surprises less likely," broker Credit Suisse said. "Industrial metals could see some profit-taking as the week progresses."
The euro hit a fresh three-week high against the dollar at 1.3063 after positive PMI data in Germany and the eurozone raised expectations that the region will avoid a recession. The single currency was last around 1.3015, still up on the day.
"The euro could go further on technical grounds - say to 1.33 - and if that happens then the metals will go up a bit further as well," the trader added.
All of the metals have recently broken above their 100-day moving averages (DMAs), which is a signal to cover shorts. Some, like copper and zinc, are nearing lurking 200 DMAs; if these are cleared, fresh long positioning could follow.
COPPER UNABLE TO HOLD ABOVE $8,400/T
Copper was last at $8,333 per tonne, down $32 and below an earlier peak above $8,400, where the metal encountered resistance. It had reached a four-month high of $8,428.50 on Friday.
Data showing stocks fell for the 15th consecutive day to their lowest since September 2009 failed to provide support - stocks were down 3,525 tonnes to 342,250 tonnes - while cancelled warrants rose a further 5.3 percent after 3,775 tonnes were booked for removal in New Orleans.
Elsewhere, aluminium pared gains to $2,242, up just $4 and below an earlier three-month high of $2,250.25. LME stocks fell 3,550 tonnes to 5,007 million tonnes from record highs but cancelled warrants soared by 86,425 tonnes, or 10 percent, to 975,100 tonnes due to scheduled removals in Johor reflecting inter-warehouse movements.
Nickel business at $20,437 was up $132. Although stocks rose 120 tonnes to 92,892 tonnes, another hefty cancellation was recorded in Rotterdam, sending total cancelled warrants up 118 percent to 3,564 tonnes.
Lead hit a four-month peak of $2,262 at one stage and then dropped back to $2,252, up $8 still. There was a moderate 100-tonne inventory decline to 345,925 tonnes.
Zinc rose as high as $2,089.50, the highest for some two months, with recent trade at $2,082 up $23, with a modest 125-tonne stock decline seen.
Tin traded as high as $22,222, its best level for around 10 weeks, before settling at $22,050, a $100 loss. Inventories fell 20 tonnes to 9,685 tonnes, a fresh low since September 2009.
Steel traded at $520 against a previous $515/520 - inventories were down 260 tonnes at 67,730 tonnes. In the minors, cobalt was indicated at $32,000/33,450.
(Additional reporting by Perrine Faye, editing by Mark Shaw)