LME Metals Up; Weak Dollar, US Outlook Lend Support

LONDON -（Dow Jones）- Base metals closed mostly higher on the London Metal Exchange Thursday, following a day of healthy rallies across almost the entire complex.

Copper recovered most of the ground lost in its most recent dip, trading at $9,440 a metric ton, up 1.2% on the day, at the PM kerb close.

A weaker U.S. dollar on the back of talk of further bond buying by the U.S. Federal Reserve provided a tailwind for the dollar-denominated complex.

"Although the weaker dollar has had a spotty record of boosting metals prices of late, we suspect it should start having more of an impact in the week ahead, particularly as we close in on the $1.40 level against the euro," said Edward Meir of MF Global.

At 1743 GMT, EUR/USD was up 0.1% at $1.3703.

Comments by the Federal Reserve suggesting the U.S. economic recovery is on track also boosted hopes for stronger demand for base metals, which are used widely in construction.

Tin continued its recent rally, hitting fresh highs as it pushed hard against the $30,000/ton mark.

While tin closed at $29,075/ton, up 1.6% on the day, it peaked at $29,300/ton earlier in the day.

However, some market participants remain skeptical of tin's near-term potential.

Barclays Capital warned that rising LME inventories, recent Chinese destocking that has "yet to be reversed" and reports of normalized output from Indonesia's primary tin producing area after a period of adverse weather may stymie tin's progress.

"There are several persuasive reasons for believing that current fundamental conditions offer enough headwinds to justify some price consolidation before a sustained attempt on the $30,000/ton level," the bank said in a daily report.

Stockpiles of tin in LME warehouse currently stand at 17,720 tons, up 2.6% on the week.

Aluminum, which has slid more or less steadily since just after the New Year, also made solid gains Thursday, closing at $2,427/ton, up 1.7% on the day.

The potential downside risk for aluminum this year is "limited," as demand for the metal looks set to stay strong, said BNP Paribas analyst Stephen Briggs in a report.