* LME due to announce decision on warehouse rule changes
* Funds buy zinc and lead on good outlook
* Expectations of Fed tapering shift further into 2014
* Dollar rises against basket of currencies
By Susan Thomas and Eric Onstad
LONDON, Oct 28 Aluminium touched the highest
level in two months on Monday as traders said investors were
betting that the London Metal Exchange (LME) would make changes
to warehouse rules that would boost the price of the metal.
Zinc and lead also hit the strongest levels since August on
fund buying, while copper was steady.
Three-month aluminium on the LME climbed to a
session high of $1,900 a tonne, the highest since Aug. 23. It
failed to trade in closing open outcry activity but was last bid
at $1,895, up 0.8 percent.
The LME said on Friday its board had made a decision on
whether to overhaul its controversial warehousing network, which
is plagued by backlogs especially in aluminium, but it would
reveal that decision later.
"There's a belief that when the LME changes come out, it
will have a positive effect on aluminium," a trader said.
Aluminium volumes were the highest of any LME metal on
Monday at 15,200 lots, compared with 11,108 for zinc and 10,595
"Aluminium prices are showing tentative signs of breaking
out of their trading ranges, and two closes above $1,890 could
set up an advance to $1,920 as the next stop," analyst Edward
Meir at broker INTL FCStone said.
Zinc gained 0.7 pct to close at $1,969 a tonne, and
lead ended up 0.2 percent to $2,210 after touching a
peak of $2,218. Both touched the firmest levels since Aug. 28.
"Zinc and lead and are the favourites of a lot of people in
the fund community, who see them as having the best
fundamentals," the trader said.
"Lead and zinc look like they're building up momentum. They
did well on Friday, and we came out of the gates today."
LOOSE FED POLICY
Copper was steady as hopes that the U.S. Federal Reserve
would keep its monetary policy loose until next year offset a
stronger dollar and concerns top consumer China may tighten
Copper closed up 0.1 percent to $7,190 a tonne,
still within the $7,000-7,420 range it has held since early
"Views are hardening quite clearly to the idea that tapering
is a long way off now," BNP Paribas analyst Stephen Briggs said.
The Fed's rate-setting committee ends a two-day meeting on
Wednesday. The chances it will trim its $85 billion monthly bond
buying are seen as minimal given the uncertainty created by this
month's government shutdown in Washington.
BNP had expected the Fed to start tapering in March next
year but has now raised the probability that it could be later
than that, Briggs said.
Asset purchases tend to support base metals by eroding the
dollar and by increasing liquidity available to business and
The dollar rose against a basket of currencies on Monday. A
stronger U.S. currency makes it more expensive for foreign
investors to purchase dollar-priced commodities and therefore
weighs on prices.
U.S. manufacturing output slowed in September as the
production of computer and electronic goods fell, suggesting
business spending ended the third quarter with less momentum.
Chinese money market rates and policy were also in focus
after rates shot up last week to their highest levels since June
and regulators signalled they were considering mild tightening
to rein in rampant inflation in China's housing market.
Among other LME metals, tin closed unchanged at
$23,200 a tonne, and nickel ticked up 0.1 percent to
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