Industrial metals were firm on Monday after the US Federal Reserve cut a key lending rate to calm financial markets, while tin rose 8.5 percent after a top producer suspended sales to the spot market, traders said.
Copper for three-months delivery on the London Metal Exchange ended unchanged versus Friday's close at $7,020 per tonne, after touching a daily high of $7,128.5, up 1.5 percent. Three-month tin closed at $14,200, after jumping 8.5 percent to touch $14,650, after the world's largest integrated tin miner, Indonesia's PT Timah said it will not do spot sales unless the price rises above $15,000.
On Friday copper, used extensively in the construction, power and auto industries, rallied 4 percent after the Fed cut the rate at which it lends to banks to ease fears of a credit squeeze and financial instability.
"After the euphoria on Friday afternoon...the markets just got a bit more hesitant again," analyst Stephen Briggs at Societe Generale Corporate and Investment Banking said.
"They (the metal prices) are holding up well because the fundamentals are pretty sound, but that would change if the perception grew that there would be serious implications for the economy and therefore for demand," SGCIB's Briggs said.
Industrial action in Latin America supported copper prices. In Mexico, talks to resolve a three-week strike at Grupo Mexico's Cananea copper mine will begin on Monday, a company lawyer said.
Fears that a credit squeeze in the US subprime mortgage sector could lead to a global liqudity crisis triggered a broad sell-off in financial markets last week. To help counter the credit market turmoil, the US central bank cut its discount rate by half a percentage point to 5.75 percent on Friday in a surprise move that sparked a powerful rebound on Wall Street. But traders said the worries persisted and investors waited to see whether the recovery was sustainable.
"I would not get too excited about the market. There's limited upside potential in the short term, because the (liquidity) problems are still around," an LME trader said. "Until there's a clearer picture the market will be very vulnerable and very volatile," he added. Tin, mainly used in coating for soft drink cans and solders for computer chips, has gained some 21 percent this year and hit an all-time high of $17,050 tonne in early August.
But amid last week's market sell-off it sank to $13,350 - its lowest in 3-1/2 months. "Prices are going up because Timah said they will not sell until the price's back up above $15,000," a trader on the LME floor said.
Three-months aluminium fell $30 to $2,467. US aluminium major Alcoa Inc said on Sunday it had temporarily curtailed production at its 1.4 million tonne Jamalco alumina refinery in Jamaica as a precautionary measure in advance because of Hurricane Dean.
Traders said the shut down did not have any impact on the prices at the moment, but could drive prices higher if there would be any damage to the refinery. Zinc gained $20 to $3,080, lead was at $2,930 versus $2,890 and nickel rose to $26,100, up $100.