METALS-Base metals surge on equities despite weak outlook

* Metals surge after equities gains on auto bailout plan.

* Outlook still bearish as economic data seen to stay weak.

* Shanghai copper closes up after falling to 4-1/2-year
low
(Releads, updates prices)

By Alfred Cang

SHANGHAI, Dec 8 (Reuters) - Base metals in London and
Shanghai jumped sharply from multi-year lows on Monday, with
commodities across the board bouncing due to an equities rally,
though a bleak economic outlook still weighed on prices.

Japan's Nikkei stock index .N225 closed up 5.2 percent
while commodities-heavy Australian S&P/ASX 200 rose 4
percent, as investors took heart from a rescue plan for U.S.
automakers.

In Washington, White House and congressional negotiators
worked on Sunday to resolve differences in an emergency rescue
package for the ailing "Big Three" U.S. automakers that would
include at least $15 billion in loans. [ID:nN07462460]

London Metal Exchange copper MCU3=LX rose as much as 5.6
percent during the Asian session, while key Shanghai copper
futures contract SCFc3 moved into positive territory after
falling by their 6 percent daily limit to a 4 1/2-year low.

Among other metals, LME three-month nickel MNI3=LX and
lead MPB3=LX rose 7 percent before retreating.

Shanghai Futures Exchange investors were trimming short
positions to pre-empt a possible move by the exchange, which
has twice previously forced the closure of some positions when
prices have consistently fallen by their daily limits.

"I need to control my exposure. I'd rather abandon the
exchange to close these short positions, and cover them by
myself," a Shanghai-based LME trader said.

"I hope Shanghai copper will not end at a downside limit
today although it seems to be very likely as bearish momentum
has dominated the market as we see disappointing economic
indicators come one after another," the trader said.

Shanghai copper SCFc3 closed up 1.7 percent at 25,130
yuan ($3,652) a tonne, after dropping to 23,260 yuan at the
open, 6 percent lower than its settlement price on Friday and
the weakest since May 2004. Its trading volume hit an all-time
record of 522,396 lots.

London Metal Exchange copper MCU3=LX rose 5 percent to
$3,200 by 0715 GMT, having traded below the psychological
$3,000 barrier in the previous session for the first time since
May 2005 after bleak U.S. employment data reinforced economic
slowdown concerns.

U.S. employers cut payrolls by 533,000 jobs in November,
the most in 34 years and worse than market forecasts.

Metal prices have not yet hit bottom as economic data
continues to be weak, a research report by investment bank
Macquarie said.

"All markets are subject to some short-covering buying in
the event of some restocking or major industry disruptions, but
until the haze lifts regarding underlying real demand, the
rallies will remain sell opportunities," analysts led by Jim
Lennon said.

Trade in the benchmark Shanghai aluminium contract SAFc3
was suspended on Monday after it hit its downside limit for the
last three trading days in a row, while LME aluminium MAL3=LX
jumped 3 percent to $1,538 a tonne.

Shanghai zinc futures touched their upside limits on
Monday, while the metal in London surged, as spot traders and
futures dealers took advantage of low prices.

Shanghai zinc SZNc3 rose to 9,220 yuan ($1,341), 6
percent higher than its settlement price on Friday, while
London Metal Exchange three-month zinc MZN3=LX increased by
4.6 percent, or $49, to $1,119 a tonne.

"Spot supplies are still tight in most part of the country.
The shortage also spurred buying on the copper and zinc
contracts in Shanghai," said analyst Pang Ying at trading house
Runtop.

South Korea's second-largest zinc refiner Young Poong plans
to cut zinc output by 10 percent, it said on Monday, the latest
in a growing list of producers to trim production as the price
of the metal more than halved this year. [nSEO333638]
Metal Prices by 0715 GMT:
Metal Last Change Pct Move End 2007 Pct chg
08
LME Cu 3200.00 150.00 +4.92 6670.00
-52.02
SHFE Cu* 25130.00 430.00 +1.74 56880.00
-55.82
LME Alum 1538.00 47.00 +3.15 2403.00
-36.00
COMEX Cu** 139.05 3.55 +2.62 304.10
-54.27
LME Zinc 1119.00 49.00 +4.58 2370.00
-52.78
SHFE Zinc 9220.00 570.00 +6.59 18950.00
-51.35
LME Nickel 9700.00 650.00 +7.18 26350.00
-63.19
LME Lead 1020.00 60.00 +6.25 2550.00
-60.00
LME/Shanghai arb^ 629
Dollar/yuan 6.8800 \ 6.8810
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
($1=6.880 Yuan)
(Editing by Ben Tan)