Copper, Nickel Rose

London copper futures rose on Tuesday on positive purchasing data from China and signs of recovery in U.S. housing, catching up after a three-day weekend to gains made in Shanghai.

But Shanghai gave up its early advances on worries prices have risen too fast.

Copper for delivery in three months on the London Metal Exchange MCU3 rose. Turnover was brisk.

There is a massive amount of selling in Shanghai related to arbitrage and it's dragging down LME. Focus is very much on the physical market -- there was a big rise in prices yesterday which may have reversed today.

Overnight data underpinned the market. Pending sales of previously owned U.S. homes rose for a second straight month in March, while construction spending edged higher, suggesting moderation in the long housing slump.

That fed into the positive sentiment generated by a survey of Chinese manufacturing that provided fresh evidence that massive fiscal and monetary stimulus is reviving the world's third-largest economy. Traders said Shanghai's direction for the rest of week would be dictated by London.

Nickel MNI3 rose 2.5 percent to $12,200, having touched $12,320 earlier. The market has been battered by a collapse in stainless demand, but the world's biggest stainless steel producer, Acerinox said on Monday it saw the market recovering in the third quarter after poor sales and weak prices pushed the Spanish firm into a first quarter loss.

The stability of nickel in recent months together with the very low level of stocks in all markets gives us confidence in a recovery of the market in the third quarter.

Base Metals surged

Base metals rose on Wednesday boosted by positive sentiments from the equity markets and falling inventories on the London Metal Exchange.

Prices were up locally on MCX though the gains were capped due to strengthening of rupee against the dollar. On Wednesday rupee appreciated by 44 paise against dollar to close at 50.8.

Outlook remains bullish but investors should enter at low levels for investment purpose.

On LME at 5.30 pm local time, copper was 3% up at $4,286 per tonne, aluminium was 1.3% up at $1,418 per tonne, lead was 1.9% up at $1,312 and zinc was almost 3% up at $1,380 per tonne. Locally on MCX at 5.40 pm, copper June was up by 2.5% at Rs 220 per kg, aluminium May contract was 0.7% up at Rs 72.15 per kg, Lead was 1.6% up at Rs 66.6 per kg, nickel was 2.1% up at Rs 561.7 per kg and zinc was up by 2.8% at Rs 69 per kg.

On LME, inventories have registered some fall with copper stocks fallen by 8,825 tonnes to a three-month low of 411,450 tonnes, adding to a fall of 5,000 tonnes on Tuesday. There had also been demand from China to profit from the widening price gap between the London and Shanghai markets.

Stocks markets across Asia gained on Wednesday on easing concerns about the Swine flu outbreak.

The consumer confidence for April was highest in more than three years and the decline in US house prices slowed in February. Metals were also supported by the weakness in dollar against the euro. Both the yen and dollar dropped for a second day against the euro after European economic confidence increased in April for the first time in 11 months.

Zambia discovered more copper

Zambia, already Africa's top copper producer, has found more deposits in its north and will invite foreign companies to conduct further feasibility studies prior to mining, a minister said on Wednesday.

More copper and manganese had been discovered in Luapula province, which borders the Democratic Republic of Congo (DRC), and the government had already issued some licenses for the mining of manganese.

The Japanese International Corporation Agency (Jica) had financed geological mapping of areas with copper and the process had been extended to the nearby Northern Province. The government is trying to impress as many mining companies (as possible) to invest in Luapula province. We have huge resources and the prospects of mining are very bright.

Zambia planned to geologically map 45% of the country where there was mineral wealth in order to invite more investors into mining. The potential (for more discoveries) of minerals is very high.

Copper mining is the economic lifeblood of this southern African country of 12 million people, where authorities say copper production will rise to more than 600,000t this year from 569,887t in 2008