BASIC METALS-Copper rallies to demand favorable outlook

Copper prices rose on Monday as the recent spate of upbeat economic data improved the outlook for demand, but optimism was limited by a further increase in inventories.
The price of copper for delivery in three months on the London Metal Exchange (LME, for its acronym in English) was trading at $ 6285.50 a tonne at 0942 GMT from $ 6230 closing Friday. "For aluminum and copper, should be a seasonal rebound in the fourth quarter," said Andrey Kryuchenkov, an analyst at VTB Capital. "But not as pronounced as in previous years. The first quarter of 2010 looks a bit better."
"Confidence is increased by the data, but confidence alone is not enough to push the market to new highs," he said. He said the fundamentals of the industry must be improved so that prices can grow even more. Last week, the market was boosted by some favorable data on the U.S. service sector and manufacturing in Germany.
But a further increase in copper stocks limited the favorable perception. Inventories in LME warehouses rose 775 tonnes to 347,375 tonnes, its highest level since mid-May.
Stocks have been rising since mid-July, reversing a trend of nearly constant falls early this year.
Trading was quiet at a time when industry experts gathered in London for the annual week of the LME, which is expected to address in depth the outlook for metal prices.
Trading volumes on the LME this year could reach the record seen in 2008 due to the high volatility of prices, said chief executive Martin Abbott LME.
Investors were also watching the preliminary data of trade in China in September, due on Wednesday to see if it holds the world's top consumer demand for base metals.
Aluminum is trading at $ 1932 from its previous price of $ 1909.
Zinc traded at $ 2070 from $ 2033.