LONDON: Copper rose on Monday as the dollar paused after rebounding last week thanks to strong US jobs data, while nickel climbed after posting its largest daily loss in two months in the previous session.
US payrolls on Friday showed wages growing at their fastest pace in more than eight years, suggesting the greenback's recent weakness might have gone too far, too fast given resurgent US inflation.
"The dollar is driving the market," said Casper Burgering, an analyst at ABN Amro. A weaker dollar makes dollar-priced metals cheaper for non-US investors.
Burgering also noted: "(Relative to) other metals, copper is lagging, it's up only 1 percent for the year. It's undervalued because the fundamentals are really good for this year."
COPPER, NICKEL PRICES: London Metal Exchange copper was up 1 percent at $7,113.50 a tonne, while nickel rose 1 percent to $13,570 a tonne, having fallen 4 percent on Friday.
Some of China's stainless steel mills, major consumers of nickel, are losing money at current prices and have already wound down their operations ahead of the week-long Chinese Lunar New Year, broker Argonaut Securities said in a report.
"We expect to see price weakness in nickel going forward," it said.
MARKETS: Stock markets were routed around the globe while bond yields rose as resurgent US inflation raised the possibility central banks would tighten policy more aggressively than had been expected.
CHINA ECONOMY: China is expected to report solid growth in January trade this week, moderating inflation and renewed bank lending, but the timing of the long Lunar New Year holidays will make it difficult to determine clear trends in the world's second-largest economy for at least another month.
LEAD: Lead prices took a breather from Friday's 6-1/2 year top to dip by 0.4 percent. Indicating nearby tightness, cash lead traded at a $23 a tonne premium to the three month price, its highest since mid-December.
ZINC TECHNICALS: Indicating nearby tightness in zinc, LME data showed one entity holds more than 90 percent of warrants, cash and "tom" positions. Also, cash zinc traded at a $48.25 a tonne premium to the three-month price.
PERU PRODUCTION: Peru, the world's No. 2 copper and zinc producer, said copper output grew 3.9 percent to 2.4 million tonnes last year and zinc production surged by 10.2 percent to 1.5 million tonnes.
ALUMINIUM: Russian aluminium maker Rusal estimates that China's winter capacity cuts will curb output by 1 million tonnes annually.
INVESTORS: Hedge funds and money managers cut their net "long" or buy position in COMEX copper in the week to Jan. 30, data showed.
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