LME CLOSE - Base metals end mixed, come off highs

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Ewa Mantheyewa.manthey@fastmarkets.comCorrespondent+44 (0) 20 7337 2146

London 15/07/2016 - Base metals ended Friday trading on the LME mixed after a volatile week in which most climbed to multi-month highs, boosted by an improvement in risk sentiment.

"The base metals complex has rallied post-Brexit on a return of risk appetite/risk-on sentiment on hopes of further global monetary easing and/or fiscal stimulus," Societe Generale analyst Robin Bhar said.

"Short covering and fresh longs entered into by the speculative/investment community has led the recovery amid strong gains in global stock markets and given lacklustre physical markets as the slow summer period gets underway," he added.

Better-than-expected Chinese data lent support although some market observers questioned whether this will prove sustainable.

"There is a clear uptrend after positive Chinese data, with shorts starting to look less confident," a trader said.

China's second-quarter GDP growth at 6.7 percent was in line with the first quarter but above market consensus of 6.6 percent. June industrial production also surprised on the upside at 6.2 percent - the fastest growth since March.

Retail sales in June increased 10.6 percent, better than the predicted 9.9 percent and the fastest year-on-year growth since December.

Only fixed asset investment growth for January-June disappointed at nine percent - the market was expecting a 9.4-percent increase after January-May's 9.6 percent.

"No doubt, the government's pump-priming polices are paying off in stabilizing the economy, but the overarching problems of excessive debt and chronic overcapacity are still issues that are hardly being dealt with, perhaps because the consequences are too destabilizing for the government," INTL FCStone analyst Edward Meir said.

In US data this afternoon, the CPI and the core CPI in June were up 0.2 percent as expected while sales and core retail sales at 0.6 and 0.7 percent respectively beat forecasts of 0.1 percent and 0.4 percent.

The Empire State manufacturing index in July at 0.6 percent was a major miss from the 5.1 estimate. The capacity utilisation rate in June stood at 75.4 percent, slightly better than consensus, and industrial production at 0.6 percent beat the expected 0.2 percent.

Preliminary UoM inflation expectations were better than expected at 2.8 percent but preliminary UoM consumer sentiment disappointed at 89.5 as did business inventories at 0.2 percent.

In the metals, copper briefly touched $5,000 this afternoon and was last at $4,918, down $23 on Thursday's close. Volumes were unexceptional - around 15,000 lots changed hands on Select by the kerb close. Stocks fell a net 3,650 tonnes to 231,275 tonnes.

Aluminium climbed to its highest since July 2015 above $1,700 but then tumbled - it ended at $1,659, down $24. Stocks were down 6,475 tonnes to 2,319,125 tonnes and cancelled warrants fell 6,950 tonnes to 973,525 tonnes.

Nickel at $10,270 was down $90. Stocks fell 1,230 tonnes to 377,586 tonnes and cancelled warrants fell 1,644 tonnes to 118,284 tonnes.

According to data from the International Nickel Study Group (INSG), the global nickel market was undersupplied in the first five months of the year by 21,200 tonnes.

Zinc at $2,204 was up $15 after stocks fell 650 tonnes to 438,425 tonnes, while lead at $1,873 was down $24. Stocks were up 500 tonnes to 186,425 tonnes.

Tin concluded at $18,140, up $45 - stocks edged down 20 tonnes to 5,995 tonnes.

Steel billet was last indicated at $300/325 and cobalt and molybdenum at $25,500/26,000 and $14,750/15,250 respectively.

(Editing by Mark Shaw)



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