Copper prices recovered at the close, with the market focusing on strong demand instead of the Chinese interest rate rise, while tin hit a new record high. Copper for three-month delivery ended at $6,640 a tonne on the London Metal Exchange, up from $6,610 on Friday.
"The market did not really react to the rate rise," an LME trader said, adding a close above $6,600 was promising and he expected more technical buying in copper, aluminium and lead.
In New York, copper for May delivery settled up 1.05 cents to $3.0215 a lb on the New York Mercantile Exchange's COMEX division, closer to the upper end of its $2.9675 to $3.0435 session range.
"This market has obviously been exhibiting a tremendous amount of strength, and I don't think the China rate hike has shaken too much faith," said one New York-based futures commission merchant.
China's central bank said on Saturday it was raising its lending and deposit rates by 0.27 percentage point, taking the one-year benchmark deposit rate to 2.79 percent and the lending rate to 6.39 percent to curb credit and investment growth.
The rise did not have a significant impact on the market as intentions by the Chinese government to slow the economy had been well flagged, analyst Michael Widmer at Calyon said. "Copper is up, largely influenced by actual buying from China and fund inflows expecting that Chinese buying pushes up prices," Widmer added.
China is the world's biggest consumer of copper and evidence that offtake had picked up pace came last week with the country's industrial production data, which showed an 18.5 percent surge.
The shortage of copper for immediate delivery was seen in the backwardation - the premium for cash material over three-months futures - at around $70 compared with a discount between November and early March. But US housing starts and building permits data for February due on Tuesday may put pressure on base metal prices ahead of a decision on US interest rates, analysts said.
Tin touched a new contract peak of $14,125 a tonne as the market continued to fret about supply disruptions in Indonesia, the world's second biggest tin producer. It was last indicated at $13,900/13,950 from $13,845/13,850 on Friday.
Lead closed up $16 at $1,942 after hitting a high of $1,945 - $10 below its all-time high recorded on February 26. "The increase in lead prices was influenced by continued rumours over problems with shipments from Ivernia's 100,000 tonnes Magellan mine in Australia," Widmer said.
Production at the Canada's Ivernia Inc mine is running as normal but with stocks at critically low levels potential or actual supply disruptions may put further pressure on prices.
Nickel traded lower at $46,550/46,600 a tonne from $47,700 on Friday, when it hit a new record high of $48,500. Aluminium traded slightly higher at $2,815 a tonne, versus Friday's $2,805. Analysts said German proposals to cut European tariffs on imports of aluminium would do little to the market. "It's a relatively marginal issue when you consider the cost issues within the industry," said John Kemp, analyst at Sempra Metals. Zinc slipped to $3,205 from $3,260.