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LONDON: Aluminium prices snapped a four-day losing streak on Thursday, boosted by a weaker dollar and optimism that stimulus measures would boost demand in top metals consumer China.

Three month aluminium on the London Metal Exchange had gained 1.2% to $2,228 a tonne by 1600 GMT, after touching 18-month lows in the previous session.

The dollar index dropped after Japan intervened in the currency market to shore up the battered yen for the first time since 1998, but later recouped losses.

A weaker dollar supports commodities priced in the greenback by making them cheaper for buyers using other currencies.

“A weaker dollar is definitely helpful, the question mark is how long that can be sustained when you’ve got the Fed being aggressive with rate increases,” said Nitesh Shah, commodity strategist at WisdomTree in London.

Fed Chair Jerome Powell vowed on Wednesday to bring down inflation, as the US central bank raised interest rates by three-quarters of a percentage point for a third straight time and signaled that borrowing costs would keep rising this year.

“Chinese data may be giving some hope that its loosening monetary and fiscal policy is starting to bear some fruit in terms of final demand for industrial metals,” Shah said.

Shanghai on Tuesday announced 1.8-trillion-yuan investment worth of infrastructure projects, heeding national policymakers’ calls to revive sluggish economic growth. The construction industry consumes a vast amount of metals.

Historically low inventories of metals and smelter shutdowns due to high power prices were also supporting the market, especially energy-intensive aluminium, Shah added.

High energy costs have forced European aluminium smelters to cut annual production capacity by 1.1 million tonnes and some Chinese smelters face energy rationing.

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