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imageLONDON: Aluminium touched a 18-month peak on Tuesday, boosted by a big long position and declining available stocks, with metals markets also supported by hopes the European Central Bank would implement stimulus measures.

Most industrial metals on the London Metal Exchange were in positive territory after signs of a weakening European economy increased hopes of market-friendly moves by central bankers.

Three month aluminium was a top gainer on the LME, climbing to a session peak of $2,100 a tonne, the strongest since Feb. 21, 2013, before paring gains to close 1.1 percent higher at $2,083.

"Aluminium has surged with the triggering of stops in fairly thin conditions helping exacerbate the rally," said analyst Leon Westgate at Standard Bank.

"Tightness in the nearby spreads and the presence of a dominant holder of cash and tom warrants... are helping both to deter shorts and to support outright prices," he said in a note.

The weakening discount between cash and forward prices signals less availability of stocks, which have been declining in recent weeks.

Investors are also wary of going short due to worries about being caught on the wrong side of the market when one participant holds 50-80 percent of LME stocks and short-term futures

The market was also supported by news on Monday that aluminium producer Alcoa Inc plans to permanently close its Portovesme smelter on the Italian island of Sardinia.

Aluminium has gained 12 percent since early July as investors bet that capacity cuts by producers and strong demand will push the market into deficit after years of overproduction.

STIMULUS HOPES:

The LME, closed on Monday for a UK holiday, got a fillip along with other markets from data on Monday showing German business sentiment sagging for the fourth month running, while a row over the lack of growth led the French government to resign.

"Any bad news is good news because it increases the odds and cements the view of a further stimulus package from the ECB," said Naeem Aslam, chief market strategist at Ava Trade.

LME copper reached its highest since Aug. 5 at $7,108.75 a tonne in intraday trade before giving up the gains and closing down 0.4 percent at $7,054. Prices notched up their biggest weekly gain last week in 11 months.

In the United States, the economy continued to gather steam. US consumer confidence rose in August to its highest level since October 2007 and orders for long-lasting US manufactured goods posted their biggest gain on record in July.

In other metals, zinc added 0.3 percent to close at$2,358 a tonne, lead edged up 0.02 percent to $2,254, nickel climbed 1.1 percent to $18,950 and tin dipped 0.5 percent to $22,025.

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