MARKET TALK: Nickel, Zinc Wary Of Index Rebalancing

Traders warily eye the impact of rebalancing the Dow Jones-AIG Commodity Index Fund on nickel and zinc, as index mechanism requires to sell high and buy low, says Standard Bank. This would see strong 2006 performers nickel and zinc sold, while small size of these markets would likely see strong impact of index selling pressure. Nickel and zinc increased around 135% and 110% respectively during 2006. Notes that the market may have priced in some selling as a result of index rebalancing as well flagged. At the Friday PM kerb, LME 3-month nickel was at $34,805/ton, up $655, zinc at $4,115.50, up $30.50.