Aluminium hit its highest in nearly three weeks on Friday after data showed China's factory sector grew for the first time in nine months, but other metals faltered after US jobs data raised the prospect of further interest rates increases. US employment increased solidly in March and wages rebounded, weighing on metals such as copper, which briefly touched a four-week low.
While some analysts said the Federal Reserve would remain cautious about raising rates due to slowing global growth, others said the upbeat data made rate increases more likely. "I think the strength of payrolls suggest the Fed will undoubtedly raise rates this year, likely in June," David Carter, chief investment officer at Lenox Wealth Advisors in New York, said.
Aluminium prices gained after the official Chinese Purchasing Managers' Index (PMI) unexpectedly rose to 50.2 in March, beating forecasts and above the 50-point mark that separates growth from contraction. Three-month aluminium on the London Metal Exchange closed up 1.1 percent at $1,536 a tonne after touching an intraday peak of $1,547, its highest level since March 14.
Some analysts were cautious, however, about PMI data in China, the world's top metals consumer, accounting for 45 percent of global copper demand. "Our economists believe it's mainly due to seasonal factors. There are some signs of a stabilising Chinese economy, but it's too early to talk about any lasting recovery," Commerzbank analyst Daniel Briesemann in Frankfurt said. Also weighing on metals were downbeat data from Japan, where business sentiment among big manufacturers deteriorated to the lowest in nearly three years, and weak factory growth in the euro zone. Helping to support aluminium prices were movements in stocks. Available aluminium inventories on the LME, which fell by another 25,000 tonnes on Friday, have slid by a fifth over the past three weeks.
Lower local inventories in Japan sparked a 5-6 percent rise in aluminium premiums for April-June shipments compared to the previous quarter, sources told Reuters. LME copper, untraded in closing rings, was bid down 0.3 percent at $4,834 a tonne after sliding to $4,807, the lowest since March 3, extending a 0.5 percent loss from Thursday.
Zinc was the strongest LME performer, rising 3 percent to finish at $1,872 a tonne. "The size of our forecast refined deficits for 2016 and 2017 require a cataclysmic global economic event just to balance the market ... and will provide the foundations for zinc to reach record high prices in the next 24 months," analyst Leon Westgate at ICBC Standard Bank said in a note. LME tin finished down 0.3 percent at $16,700 a tonne after sliding to $16,300, the weakest in over three weeks, while lead climbed 2.5 percent to close at $1,748 and nickel fell 2 percent to $8,320.
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