Industrial metals rebounded on Monday from Friday's sell-off in global markets and analysts said copper was underpinned by talk of potential strikes in Chile.
London-listed miners like BHP Billiton, Rio Tinto, Xstrata and Anglo American were up between 1.5 to 3 percent as European stocks gained ground after a five-day losing streak.
"Metals are rebounding after the falls on Friday," analyst John Meyer at Numis said. Copper for delivery in three months on the London Metal Exchange firmed to $7,360 a tonne in the official session, up 3 percent or $220 from Friday, when it shed almost 4 percent after fears of higher interest rates boosted dollar
"The fall on Friday was rather a cross-market fall out and today it is picking up and we're still relatively bullish, on the optimistic side," an LME trader said.
Metals, which have become more popular among the investment community since the start of the decade, are prone to react to macro-economic news as much as events unique to the metals markets, so dollar moves often rebound on metals.
"Also, the strike talk provides support for copper," he added. Subcontracted workers at Chilean Codelco, the world's largest copper mining firm have been threatening to strike in a bid to secure better pay and conditions.
The company pledged to take steps to improve pay and conditions but a workers' representative dismissed the promise as "absolutely unsatisfactory". "Small short covering seems to have bid the market up considerably on the thin volumes," another LME trader said.
Though more than $1,500 below the all-time peak it hit in May 2006, copper, used widely in electrical wires and water pipes, remains almost 40 percent up from the eleven-month low of $5,250 it touched in February.
Nickel, a key input for the stainless steel industry, rose to $42,500, up $300 from Friday. The metal shed almost 11 percent last week and fell to an 11-week low after the LME altered trading rules in response to a tight market that had pushed prices to record highs.
"Nickel is up, but charts show a major break in the uptrend and prices have much to do before technicals shows signs of improving. We still think rallies will continue to remain vulnerable," Man Financial said in a research note.
Cutbacks from stainless steel mills and producers shifting to materials with less nickel content have dampened sentiment.
But traders think market tightness should continue. "People are still talking in negative terms about the future, but in the near future there is still tightness," he said.
The backwardation - often seen as a gauge of the tightness of immediate supply - was around $1,000, down from the $4,000 it touched last month, but the three-month nickel price had not collapsed, which showed strength remained, the trader said.
Brazilian miner Companhia Vale do Rio Doce will double nickel production to 500,000 tonnes in the next 4-5 years, executive director Jose Carlos Martins said on Monday. Martins said CVRD, which acquired Canadian nickel giant Inco in October 2006, would spend around $2 billion each year to achieve this target. Aluminium which, compared with other LME metals, has performed steadily since the start of the year, closed at $2,724 a tonne, up $34.
Zinc gained to $3,745/3,750 from Friday's $3,630 while tin closed was $100 higher at $13,975/14,000 and lead was $75 firmer at $2,345/2,350.
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