Reply #26: Base metals charge higher as funds buy

[Ghost Dog]

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060905:MTFH21043_2006-09-05_13-54-21_L05207047&type=comktNews&rpc=44

LONDON, Sept 5 (Reuters) - Base metals rallied sharply on Tuesday, led by gains of between three and five percent in copper, nickel and zinc on chart-driven fund buying, dealers said.

"The buying is coming from the systematic trading funds and it is fairly predictable. The general expectation last week was that the upside would be probed after we failed to break lower," a trader said.

"Supply is another issue. The worries about short-term supply problems have outweighed any concerns about long-term economic growth. The question is whether consumers will step in and chase this higher," he said.

Analysts said investment funds might be pouring their September allocation into base metals, driving prices up.

"This could be new fund money for the start of the month. The dollar is weaker, which in the absence of anything else also means new buying," Man Financial analyst Edward Meir said.

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