London Metal Exchange (LME) copper recovered nearly three-quarters of the previous day's losses by Tuesday's close as investors bet a wave of fresh money would hit the market at the start of March, dealers said. Copper ended the day at $4,798 a tonne, up $138 from Monday's PM kerb.
The market lost $190, or almost 4 percent of its value, in a sell-off on Monday sparked by news that shipments of the metal into China fell sharply in January.
"Copper held support around $4,660 on Monday. The downside was a little overdone and there will be more money coming into the market tomorrow with the new month so it probably doesn't pay to be short," one fund source said.
Investors with little experience of +commodities were still looking for ways to get exposure to the market, an asset manager at a European commodities investment fund said.
"It's new speculative investors, investors who have never traded commodities...they understand Chinese demand, they understand tightness and they understand gold has a monetary element...they just want to be involved in the upward move."
Other base metals rallied with copper.
Zinc, which has gained over 20 percent since the start of the year, ended the session at $2,359, up $114 or around five percent.
"If you look at the complex over the past couple of weeks, bearish sentiment has been creeping in, but of all the complex zinc is the most fundamentally supported and people see it with more upside," an LME trader said.
Analysts and traders have pinpointed zinc as the base metal most likely to make big gains in 2006.
Zinc hit a record peak of $2,420 early in February.
Aluminium rose $50 to $2,410, but analysts said the metal lacked the positive fundamentals seen in zinc.
"We have seen an additional 300,000 tonnes of reported stocks since the end of 2005. During the whole of 2005 reported stocks rose by just 5,000 tonnes," ABN Amro analyst Nick Moore said, adding that the market now appeared to be in surplus.
Nickel closed steady at $14,950, with lead at $1,182, up $16, and with tin flat at $7,750.
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