Copper soared to a record high today as a strike in Peru stoked supply fears and as investors sought alternatives to equities, while surging oil pushed aluminium to a four-month peak.
Copper for three-month delivery on the London Metal Exchange was at $8,835/8,855 a tonne at 10.00 GMT, down from an earlier record high of $8,940. It closed at $8,720 on Wednesday.
Aluminium was up at $3,205/3,215 a tonne from $3,200 on Wednesday. Earlier in the session it reached $3,229 a tonne - the highest level since 7 March.
"The rise in prices is a confluence of recent factors: the weak dollar, the record oil price and the continued spate of production problems," said Robin Bhar, an analyst at Calyon.
Workers at Freeport-McMoRan's Cerro Verde pit, Peru's third-largest copper mine, joined a nationwide strike that entered its third day on Wednesday.
A global sell-off knocked world shares to a five-month low on Thursday as surging oil fanned concerns about inflation and slowing growth, just hours ahead of an expected euro zone interest rate hike and a key US jobs report.
"Weakening stock markets are something we can't ignore, particularly at the beginning of a new quarter and the second half of the year," Bhar said.
"We are seeing fund inflows although they are being a lot more sophisticated about it by going for the markets that are really tight like copper and aluminium."
The euro hit a two-month high against a broadly struggling dollar as the market waited for the ECB's rate decision at 11.45 GMT and key US non-farm payrolls data for June at 12.30 GMT.
ELECTRIC ALUMINIUM
Analysts said rising energy prices were the main support for aluminium.
"The single most important factor in the aluminium price increase is that the cost of production has gone up rapidly," said Eugen Weinberg, commodities analyst at Commerzbank.
Oil rose to a new record high of $145.85 after government data showed crude inventories fell much more than expected last week.
Aluminium, used in transport, packaging and power, is heavily reliant on electricity. Analysts estimate between one-third and 45% of smelting costs are for power.
London Metal Exchange lead fell nearly 5% to a near five-month low of $1,625 a tonne as investors worried about oversupply in the market and was at $1,640/1,660 a tonne versus $1,705 on Wednesday.
LME lead stocks rose by 25 tonnes to 100,500 and have more than doubled since January.
"Lead has been on its knees and I think it can go lower," Bhar at Calyon said. "We're in a slack period for demand. You don't tend to get battery-buying and restocking until the end of the third quarter."
Zinc fell to $1,825/1,845 a tonne from $1,865 on Wednesday. Earlier it touched $1,821 a tonne, the lowest since December 2005.
Tin rose to $23,575/22,875 a tonne from $23,200, while nickel slipped to $21,075/21,275 a tonne versus $21,150 at Wednesday's close.
By Anna Stablum, Reuters
