Copper rallied to a fresh eleven-month high, while nickel and lead set new contract peaks, reflecting gains across the commodities complex, and supported by supply fears, dwindling stocks and a weaker US dollar.

The market is benefiting from reduced liquidity due to the closure of the major Asian markets this week to hit fresh peaks, analysts said. “Illiquidity always breeds volatility, which is also why we are seeing this kind of move higher,” said analyst Michael Skinner at Standard Bank. Traders are watching developments in Peru, the world’s third largest copper and zinc producer, where around 30,000 mining workers have been on strike since Monday demanding higher wages.

The miners are meeting today to vote on the continuation of the strike. “The longer this situation (in Peru) lingers on, the more of an upside risk it is to metals prices,” said analysts at Barclays Capital.

Some reports suggest, however, tensions are easing with Labour Minister Susana Pinilla quoted as saying the strike may end by tomorrow. At 4.20 pm, LME copper for three-month delivery was up at 8,275 usd per tonne against 8,180 usd at the close on Thursday. Earlier the red metal touched 8,325 usd, its highest level since June last year.

Zinc also posted gains, rising to 4,125 usd a tonne against 4,030 usd at the close yesterday, having earlier touched a high of 4,160 usd. “I would not be surprised to see zinc at all-time highs before copper,” noted Skinner. Copper was also supported by another fall in stocks stored in LME-stamped warehouses, which dropped 1,100 tonnes to 150,925 tonnes, said the LME.

Nickel touched the 51,000 usd level earlier in the session, a new contract high, boosted by expectations of strong demand for stainless steel and by fresh declines in LME stocks, which fell this morning for the fifth successive day, analysts said.

Technical factors after the metal broke through 50,200 usd are also supporting gains, analysts said. Nickel was at 50,950 usd from 49,850 yesterday.

Also fuelling prices was news the Esperance port in Western Australia, which suspended shipments of lead earlier this year pending the results of an investigation into environmental damage, may be tightening up its shipments of all metals.

About 213,000 tonnes of nickel concentrate were shipped through Esperance last year.

The suspension of traffic though Esperance also helped push lead to new all-time highs this morning. The port handles shipments of lead from the Magellan mine, operated by Canada’s Ivernia Inc. At full production, the mine supplies about 3 pct of the world’s mined lead.

Lead, which also benefited from the Peruvian strike, was up at an all-time high 2,110 usd from 2,075 usd.

Elsewhere, the base metals benefited from weakness in the US dollar against the euro after US jobs data released earlier today came in softer than expected.

The US economy added just 88,000 jobs in April, sharply below the 115,000 jobs economists had expected from the survey of employer payrolls.

“The consensus was for 100,000 or higher, so the data is a little disappointing,” said James Steel, an analyst at HSBC in New York. “The dip in hourly wage gains was also disappointing, and the two have combined to put pressure on the dollar.” In other metals, tin dipped to 14,300 usd from 14,425 usd, while aluminium was flat at 2,848 usd.

jan.harvey@thomson.com as/vlb/har/har/tc COPYRIGHT Copyright AFX News Limited 2007. All rights reserved.

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