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METALS-Aluminium hits highest in nearly two months in thin trade

Eric Onstad
Monday, 30 Dec 2013 | 6:05 AM ET

* Consumer buying lifts aluminium in thin conditions

* Copper edges higher after four-session rally

* Hopes of recovery in Chinese demand supports

(Adds details, quotes; previous SINGAPORE)

LONDON, Dec 30 (Reuters) - Aluminium touched the highest in nearly two months on Monday as consumer buying raised the market in thin conditions.

Three-month aluminium was the biggest mover on the London Metal Exchange, climbing 1.4 percent to $1,835.25 per tonne by 1047 GMT, the strongest since Nov. 5.

"I think there was some consumer buying," said Gianclaudio Torlizzi, partner at T-Commodity, saying low liquidity during the holiday period exaggerated the gains.

Aluminium also broke above its 100-day moving average, a bullish sign for investors who watch signals based on chart patterns.

"I see the metals as vulnerable to selling when traders come back to work. Every spike is a good selling opportunity in my view."

Another analyst, Nicholas Snowdon at Barclays, recently said that the supply-demand fundamentals in aluminium were changing after years of oversupply and surpluses.

"We believe the market is now turning a corner, with the aluminium market ex-China having fallen into deficit in 2013 and that deficit set to get bigger in 2014," he said in a note.

Copper edged higher, trading around its highest since mid-August, as signs of global economic recovery and hopes of improving Chinese demand supported prices.

Copper rose 0.26 percent to $7,401.50 a tonne. Copper jumped to $7,415 a tonne on Friday, its highest since August 16.

The most-traded March copper contract on the Shanghai Futures Exchange rose 0.1 percent to 52,340 yuan a tonne.

"There is some profit-taking today but the recovery is on people's minds," said Barclays analyst Sijin Cheng in Singapore.

"The Fed is tapering, it is an indication that the economy is on more solid footing and China has also been alleviating some of the fears about the credit crunch."

Chinese Premier Li Keqiang said that the government will keep liquidity at an appropriate level in 2014 to maintain the stability of financial markets and the broader economy.

Copper was also garnering support from a lack of readily available metal due to falling exchange stocks.

"For some metals, the supply has been little bit tighter than what people had anticipated," said Cheng.

LME data on Monday showed copper stocks in exchange-registered warehouses extended its recent decline, dropping to 367,450 tonnes, the lowest since January. <MCUSTX-TOTAL>

Still, ample copper concentrate seen flowing into the market next year will eventually feed into more stocks of refined copper, swelling supply and overhanging prices.

Indonesia's mining industry plans to ask the nation's Supreme Court to settle questions over the implementation of a mining law that threatens to halt all unprocessed mineral exports starting next month.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin

(Additional reporting by Naveen Thukral in Singapore; editing by Jason Neely)

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