October 30, 2008 / 1:42 AM / 11 years ago

UPDATE 3-LME metals extend monster rally, Shanghai limit up

 * LME metals extend mammoth overnight gains ahead of US
 * Shanghai copper and zinc limit up after LME rally
 * Tin bounces almost 50 pct in less than a week
 * Markets may have bottomed, risk starting to favour longs
 By Nick Trevethan
 SINGAPORE, Oct 30 (Reuters) - London copper futures rose
almost 2 percent on Thursday, extending Wednesday's 12.6
percent surge, while Shanghai copper and zinc surged by their 4
percent upside limit, chasing the sharp rally in international
 London futures reversed early losses to revive their
longest string of gains since June. Sentiment was supported by
continuing dollar weakness, with the greenback posting its
biggest one-day fall in 23 years against a basket of currencies
after the Fed delivered an expected 50 point rate cut and
China's central bank also cut rates.
 Direction later on on Thursday is will be geared towards
U.S. third quarter GDP data, seen falling by 0.5 percent versus
a 2.8 percent rise in the second quarter, and how  equity
markets react.
 "Direction will be determined by equities, the dollar and
all the usual financial market factors that have been driving
this," a dealer in Singapore said.
 "But the risk now seems to favour being long rather than
short. However we are not yet putting on any big directional
 London Metal Exchange copper MCU3=LX for delivery in
three months rose 1.9 percent, or $90, to $4,745 a tonne by
0702 GMT, adding to Wednesday's $525 gain.
 Prices have risen around 26 percent so far this week and if
the market can maintain those gains, copper is set for its
biggest weekly rise on record. Despite that, for the month,
prices are still down 25 percent, which would be their biggest
fall in at least three decades.
 For a chart detailing monthly metals prices changes click:
 "The down move has to bottom out at some point. We have
seen some real lows tested -- our bottom for copper is around
$3,500 to $4,000," MF Global analyst Edward Meir said.
 On Monday, prices dipped to $3,590, their weakest for more
than three years.
 "The decline may have ended and we are set for a period of
sideways trading in 2009, much as we saw at the start of the
century," Meir said.
 Shanghai copper futures SCFc3 rose by their 4 percent
threshold to 33,100 yuan ($4,838) and zinc SZNc3 also topped
out at its limit, at 9,515 yuan, after London zinc jumped
almost 10 percent.
 LME tin MSN3 rose $25, or 0.2 percent, to $15,250. Tin
prices are up almost 50 percent since plunging to a 21-month
low of $10,300 on Oct. 24.
 "Tin is doing very well. Stocks are dropping, and the
market is very dependent on a single producer, Indonesia, which
has said it will cut production when prices fall below
$15,000," Meir said.
 In contrast to most other metals, tin stocks have fallen
steadily during 2008. LME inventories of the metal, which is
seeing rising demand as a replacement for lead in electrical
solder, have dropped 75 percent since August last year to 3,815
 By contrast, copper stocks have risen 78 percent in the
same period.
 Metals prices ar 0702 GMT
 Metal         Last       Change   Pct Move  End 2007  Pct chg
 LME Cu        4745.00     90.00     +1.93    6670.00   
 SHFE Cu*     33100.00   1280.00     +4.02   56880.00   
 LME Alum      2185.00     34.00     +1.58    2403.00    
 SHFE Alum*   14455.00    260.00     +1.83   18180.00   
 COMEX Cu**     203.85     -4.20     -2.02     304.10   
 LME Zinc      1255.00     -5.00     -0.40    2370.00   
 SHFE Zinc     9515.00    290.00     +3.14   18950.00   
 LME Nickel   13400.00   -240.00     -1.76   26350.00   
 LME Lead      1600.00     20.00     +1.27    2550.00   
 LME Tin      15250.00     25.00     +0.16   16400.00    
 LME/Shanghai arb^          4872
 Dollar/yuan          6.8397 \ 6.8400
 ** 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
 (Reporting by Nick Trevethan; Editing by Clarence Fernandez)

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