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Financials

METALS-Aluminium hits 4-1/2 month high after China cuts bank reserve ratio

* Aluminium producers seek premium increase in Japan
    * China's move seeks to revive economic growth
    * Chile copper production down 14 pct in Jan

 (Updates with closing prices)
    By Eric Onstad
    LONDON, Feb 29 (Reuters) - Aluminium hit a 4-1/2 month high
and copper trimmed losses on Monday after top metals consumer
China cut its reserve ratio for banks in an effort to revive
flagging growth.
    Investors welcomed the move by China's central bank to
reduce the amount of cash that banks must hold as reserves for
the fifth time since February last year. 
    "Any sense of proactive policymaking in China towards
stabilising the economy and the exchange rate will be taken
positively by commodity markets," said Nicholas Snowdon, metals
analyst at Standard Chartered in London.
    Three-month aluminium on the London Metal Exchange
gained 0.8 percent to close at $1,573 a tonne after touching
$1,589, its highest since Oct. 15.
    The premium for LME cash aluminium over the benchmark
three-month contract CMAL0-3 jumped to $18 a tonne, the
strongest since April 2015, indicating tight near-term supply.
    Some big aluminium producers are seeking an increase in
surcharges of 14-18 percent for physical delivery to Japanese
buyers for April-June primary metal shipments, sources said.
    
    StanChart's Snowdon was wary of predicting continued gains
in base metals, given the strong rebound from January lows that
has lifted the LME index of six metals by 9 percent
since Jan. 12.
    "Both the physical market and most recent economic data from
China suggest that we should see come consolidation in prices in
the near term."
    LME prices were dampened during Asian trading by a retreat
by Chinese equities, with sentiment also hit by this weekend's
failure of the G20 group of leading economies to come up with
concrete measures to boost growth.  
    LME copper recovered most of its losses after the
Chinese central bank news and ended down 0.2 percent at $4,695 a
tonne, having earlier fallen by as much as 1.3 percent.
    In the previous session copper jumped by 2.2 percent,
reaching its highest level since Nov. 16 at $4,771.
    The market also gained support from news that the world's
biggest copper-producing country, Chile, posted a 13.8 percent
drop in output in January. 
    "We are finally seeing some welcome reductions in Chilean
copper production," said Edward Meir, analyst at broker INTL
FCStone.
    Investors worried about the risk of a new global recession
are hoping that data over the coming week will show that some
momentum remains in the world economy, eight years into its slow
recovery from the financial crisis. 
    Metals markets await with interest the Chinese industrial
production figures due for release on Tuesday and the U.S.
non-farm payrolls on Friday. 
    In other metals, zinc finished 0.3 percent higher at
$1,764, lead gained 0.5 percent to $1,752, tin 
dropped 0.6 percent to $15,800 and nickel was unchanged
at $8,490.

    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          
    Most active ShFE nickel          
    Three month LME tin             
    Most active ShFE tin                    

 (Additional reporting by Melanie Burton in Melbourne; Editing
by David Goodman)
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