metals were boosted on Wednesday as equity markets headed higher, with copper rising 1.6 percent, but analysts said the sentiment remained vulnerable.
London-listed miners like Xstrata, Anglo American and Rio Tinto rose up to 5 percent, led by a bullish outlook from Chilean copper miner Antofagasta, and helped European shares to go higher.
Benchmark futures in copper for delivery in three months on the London Metal Exchange ended the official session at $7,290 a tonne, up 1.6 percent, or $115 from Tuesday.
In New York, copper for July delivery settled up 2.60 cents to $3.3130 a lb on the New York Mercantile Exchange's COMEX division, recovering from a 2-1/2-week low at $3.21 in electronic trading and climbing as high as $3.3230.
Part of the recent shake-up has to do with the broader macro front, so once we see that macro front stabilising I think the sentiment towards the complex improves, analyst Sudakshina Unnikrishnan at Barclays Capital said.
U.S. stocks rose after data pointing to strength in the U.S. consumer spending boosted optimism and a pullback in benchmark bond yields helped rebound global equity markets.
The fear of rising interest rates that has affected global financial markets and helped the U.S. dollar to strengthen had a knock-on effect on the LME, and despite the recovery, the market remains cautious.
But the general sentiment continues to be rather fragile to any negative news or data, Unnikrishnan said.
If rates rise it will put pressure on metals, an LME trader on the floor said.
There was some fund selling earlier and though it's recovered since then, we are hearing of some funds wanting to go short, an LME trader on the floor said, referring to a trade which becomes profitable when prices fall.
STOCKS, STRIKES SUPPORT
Antofagasta Plc said 2007 would be another strong year for the firm and it expected copper prices to remain historically high well into 2008.
There does seem now to be a consensus these (copper prices) should remain high compared to historical levels well into next year, Chairman Jean-Paul Luksic said at the company's annual shareholders meeting, adding that the high prices were partly driven by higher production costs.
Copper saw some support from a string of strike threats in Latin America and Canada.
More than 400 workers at Xstrata Plc's CCR copper refinery in Montreal were on strike after talks with the company broke off, company and union officials said.
Subcontracted workers at Chile's Codelco, the world's largest copper mining firm, have been threatening to strike for better pay and conditions and, elsewhere in the country, workers at Collahuasi said they planned demonstrations later this week to demand an improved labour contract proposal.
In Mexico, workers at the country's largest copper mine have backed a strike call by their union, bringing a threatened stoppage one step closer at nine Grupo Mexico operations later this week.
Stocks of unused copper in LME-registered warehouses fell 450 tonnes.
Steel-making raw material nickel, which tumbled 6 percent on Tuesday, fell to $38,900 before ending the session at $40,000, up slightly from Tuesday's closing price of $39,850.
Stainless steel activity in the US and the EU is declining, Dresdner Kleinwort said in a note.
China is increasing the production of low-nickel containing pig iron. This shows that the record prices of nickel induced consumers to switch to substitutes, the bank said.
Nickel shot to a record peak of $51,800 in May from under $30,000 in November last year, and users of the metal have claimed such high prices are making it more difficult for them to profitably produce nickel-bearing stainless steels.
Zinc was last quoted at $3,669/3,670, down $41 from Tuesday, in response to an influx of stocks, BNP Paribas analyst David Thurtell said.
Stocks rose 2,800 tonnes to 74,050, bucking a trend that has seen inventories fall by 87 percent since mid-2005.
Aluminium (MAL3: Quote, Profile, Research) was up $19 at $2,718. Producer Alcan said it had signed a new long-term agreement to supply Airbus with aluminium products.
Lead finished $25 down at $2,300 and tin (MSN3: Quote, Profile, Research) was last quoted at $13,975/14,000, up $25 from Tuesday.