BASE METALS: LME Metals Mixed As China, Dollar Weigh

Base metals on the London Metal Exchange traded mixed Tuesday as concerns about the future of China's monetary policy and a strong U.S. dollar weighed.

Losses were partially offset late in Europe's trading day by U.S. consumer confidence, which rose for the third consecutive month in January, traders said.

However, they cautioned that the base metals are still vulnerable to more selling if the dollar rebounds further, China shows other signs of tightening its monetary policy, or debt problems spread in Europe.

"Base metals are being whipped about in the wake of financial markets and, as we head into the Chinese New Year, we expect this to intensify," said Standard Bank analyst Walter de Wet.

LME base metals may not be able to sustain a rally due to rising risk aversion, he said.

Indeed, Barclays Capital said commodity investment in the first part of 2010 is mixed.

"The major commodity benchmark indices are in negative territory so far in 2010 and are underperforming other asset classes significantly," it said.

Investor interest played a large role is driving prices up last year. Commodity assets under management stood at $256 billion at the end of 2009, a record $92 billion rise on the year, Barclays said.

 
   Prices in dollar a metric ton. 
3 Months Metal     Bid-Ask        Change from 
                                 Monday PM kerb 
Copper          7380.0-7381.0       Dn   85 
Lead            2200.0-2201.0       Dn   15 
Zinc            2318.0-2318.5       Up    3 
Aluminum        2220.0-2221.0       Dn   22 
Nickel         18200.0-18225.0      Up   50 
Tin            17950.0-17975.0      Up   50 
Aluminum Alloy  1990.0-2000.0       Dn    5 
Aluminum Alloy  2090.0-2110.0       Dn   31 
   (NASAAC)

-By Devon Maylie, Dow Jones Newswires; +44 (0)20 7842 9483; devon.maylie@dowjones.com

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