Base metal prices lifted in ring trading on the London Metal Exchange (LME) on Thursday after an expected copper stock increase failed to materialise and encouraged short-covering, traders and analysts said.
"Instead of increasing by 20,000 tonnes as expected, copper stocks actually declined by 425 tonnes," Man Financial said in a daily report.
The stock news set off a wave of short-covering, added to by a weakening dollar, it said.
The dollar lost a little ground against the euro after an index of leading financial indicators in the United States declined more than expected.
Earlier, initial US weekly jobless claims dipped to 331,000 for the latest week, below forecasts for 335,000.
Soaring oil prices and news of a flare-up of fighting in the Iraqi holy city of Najaf also undermined the dollar.
Three-month copper futures lifted to $2,795 a tonne at the kerb close, versus $2,761 at Wednesday's finish.
"There was steady short-covering in copper plus a little bit of trade buying interest," one trader said.
"However, we'll see what the market does overnight in Asia because if they don't continue buying prices could ease back."
Traders said the market remained tight with TOM/next business trading up to $7 backwardation, while the cash to three months spread was at $57 backwardation from around $42 on Wednesday.
"The spreads are signalling that we should not see further declines from here and the dollar remains supportive," Man Financial said.
"We expect copper to trade in a tight range looking for further direction."
Aluminium firmed to $1,733 from $1,713, while nickel rose to $14,250 from $13,800 on technical buying.
The weaker dollar remained supportive to aluminium, along with supply worries.
The union at Alcoa Inc.'s Becancour smelter in Quebec said on Thursday that three days of intensive talks aimed at ending a six-week strike had yielded no progress.
Zinc rose $10 to $992 and lead was up $18 to $862/863. Tin, though, bucked the overall trend, easing by $25 to $9,000/050.