Base metals spring back

Industrial metals rallied on Tuesday, bouncing from steep losses in the previous session, but looked vulnerable due to ongoing worries about austerity steps in the eurozone and policies that could cool Chinese growth. Copper for three-months delivery on the London Metal Exchange rose to $6,700 a tonne in official rings from a close of $6,470 on Monday when it slid some 7 percent to its lowest since February 9.
The metal used in power and construction earlier rose more than 4 percent to a day's high of $6,770. Nickel prices rose nearly 7 percent to as high as $22,125. German investor sentiment fell sharply in May on concern growth will be stifled by a 750-billion-euro ($930 billion) rescue package designed to calm market fears of a wave of Greek-style debt crises. The closely watched ZEW analyst and investor survey saw medium-term growth down in Europe's biggest economy.
Traders say the fear now is that current problems in the region could drag the eurozone into a financial crisis, which would hit its economic growth and demand for metals. Investors also fret demand from China could soften as the world's top metals consumer reins in growth.
China's key stock index rose 1.4 percent after tumbling more than 5 percent the session before, its biggest drop in over eight months as a severe state clampdown on runaway property prices hit property stocks. Falling LME copper stocks indicate healthy demand. Inventories last fell 1,025 tonnes, bringing the total to 483,150 tonnes, the lowest level since end-December.
The most striking move in inventories was on aluminium, which last showed a massive rise of 36,600 tonnes, taking the total to 4.51 million tonnes and close to the record highs. LME aluminium, which slid more than 5 percent in the previous session, was at $2,052 a tonne from Monday's $1,990. Stoking market tightness, data showed a dominant position holding 50-80 percent of LME aluminium warrants and cash positions as of the close of business on Friday.
Tin rose to $17,500 a tonne from $17,150 a tonne amid rising tin exports from Indonesia, the world's top exporter of the metal. Battery material lead was at $1,835 a tonne from $1,805 while zinc rose to $1,939 a tonne from $1,899.