By 0707 GMT three-month copper on the London Metal Exchange stood at $9,860 a tonne, up from $9,745 at Monday's close.

Fundamentals are supportive of copper and a new wave of fund money may be poised to sweep through markets, traders said.

"There are close to a trillion dollars yet to enter commodities. Investors have missed the boat. They have waited for big pullbacks which never really happened," a commodities trader in Singapore said.

"Two scenarios present themselves now: They panic and pump money in, or if markets pull back they won't fall far because that cash will stream in. We have seen signs of the latter already.

When copper dipped below $9,300 one party picked 2,500 lots in just five minutes."

Tin rallied 1 percent and Shanghai's most-active copper futures contract, April , rose 2 percent to 74,950 yuan a tonne, having touched 75,000 yuan, its strongest since April 2007.

"Everyone thought we were going to ease into the Lunar New Year and it's not happening. We are seeing good volumes in base metals. The rise in open interest and rising prices suggest new longs," Barclays Capital analyst Yingxi Yu said.

Metals are feeding off positive sentiment from a steady stream of positive economic data from the United States that is also lifting equity markets, including a 22-1/2 year high in Midwest factory activity and an upbeat tone in consumer spending.

On Tuesday, HSBC's China Purchasing Managers Index reported a rise in January showing solid growth in the country's vast manufacturing sector after factories took in more new orders, while input prices dipped in a tentative sign of receding inflation.

"In the current market this data will be interpreted as positive," BarCap's Yu said.

Chinese markets will be shut from Wednesday for week-long holidays, and traders warned of the risk of volatility during Tuesday's session as investors close out or square up ahead of the break.

Data from the Shanghai exchange shows open interest dipped below 310,000 lots last week from 335,000 on Jan 19, but open interest has crept up in the past day or two, suggesting some Chinese investors may be looking to enter the holidays carrying some exposure.

"Some Chinese players are taking a punt that over the holidays London will continue to rally. We are not talking about big positions, but the trend in copper looks well-entrenched so it's a tempting bet: a trader in Hong Kong said.

Copper was seen rallying above $10,200, on the resumption of a long-term bull trend, according to Reuters analyst Wang Tao.

A fierce wave (3) is advancing, indicated by the rise from $9,235 to $9,664 which has adopted a clear five-wave mode, and the strong bullish momentum confirmed an impulsive wave mode.

An immediate target is established at a minor resistance of $9,942, the 100 percent Fibonacci projection level, but for this week, copper is expected to surpass this level and surge to $10,207, the 161.8 percent Fibonacci projection level.

As well as chart patterns, the market will also be watching the progress of Cyclone Yasi, a monster storm packing wind speeds of 175 miles per hour (280 kph), which is bearing down on Queensland.

Forecasters said the storm would lose strength once it made landfall on Wednesday or early Thursday, but it could still sweep as far inland as the Mt Isa copper-lead-zinc complex.

In other metals, nickel rose to a nine-month peak at $27,750, aluminium equalled a 28-month high scored in January, but lead and zinc traded below recent highs. In Shanghai, zinc rallied 4 percent to close at 19,460 yuan, its highest since early January.