Copper rises on weak dollar, tin at contract high 
* Euro jumps against dollar
October 5, 2010
Copper rose in synch with precious metals on Tuesday, as the euro jumped versus the dollar and after Japan unexpectedly lowered interest rates, raising expectations of further boosts for other major economies.
Tin rose to a contract high at $25?800 a tonne on persistent supply worries from top exporter Indonesia.
Benchmark copper for three-months delivery on the London Metal Exchange traded at $8?142 a tonne at 13:15 SA time from a close of $8?064 on Monday.
"Further dollar weakness is certainly driving things and that is really a response to strengthening euro," Daniel Brebner, analyst at Deutsche Bank, said. "The market is reacting to further monetary accommodation out of Japan.
"We've seen very strong pricing in the precious metals and there's a bit of a sympathetic move on the base metals complex because they do react to macroeconomic policy."
The Bank of Japan pledged to pump more funds into the struggling economy and keep interest rates virtually at zero, surprising markets and stealing a march on the Federal Reserve in providing a fresh dose of economic stimulus.
The euro jumped against the dollar on reported Asian buying, pushing the greenback to an 8-1/2 month trade-weighted low.
Metals tend to benefit as the dollar falls, because a weaker dollar makes them cheaper for holders of other currencies.
Gold rallied to an all-time high, lifting silver to its highest in 30 years as worries about the eurozone economy highlighted bullion's perceived safe-haven appeal.
Looking ahead Tuesday's macro calendar, the Redbook weekly US retail sales index and the ISM non-manufacturing index are due later. Investors will also look out for a key jobs report later this week for further clues on the pace of recovery in the world's largest economy.
If the economic data remains lacklustre, it will likely reinforce bets that the US Federal Reserve will embark on more quantitative easing, which should erode dollar values further and bolster the appeal of metals as a hedge against inflation.
TIN SUPPLY WORRIES
Market balances in copper have been tightening for many months, with stocks in LME warehouses tumbling more than 30 percent since the middle of February. Tuesday's data showed LME stocks down 350 tonnes to 374?100 tonnes.
Tin traded at $25?700 a tonne versus $25?200 at the close on Monday. Indonesia's refined tin output may fall nearly 6 percent this year as heavy rains hit mining and more easily mined onshore reserves are being depleted, an analyst at the International Tin Research Institute said.
The combination of supply constraints in Indonesia and falling global stocks, together with resurgent demand from the electronics sector are likely to support tin prices this year and next, after gains of nearly 40 percent so far in 2010.
"The supply side is clearly an issue," said Societe Generale analyst David Wilson. "Indonesian exports have disappointed so far this year, due to a combination of the government's crack down on illegal mining, plus the impact of severe weather conditions limiting supplies."
"Demand has been strong from the solder sector -- demand in Asia for white goods has grown. Stocks (also) look tight."
Traders also cited last week's shutdown of a plant by China's second largest refined tin producer.
LME tin was indicated at an $11.50 premium or backwardation for the December contract against the benchmark three months. November against December was offered at a $4 premium, up from $2 on Monday.
Among other metals, aluminium traded at $2?361 a tonne, down from Monday's close of $2?363.
Battery material lead traded at $2?300 from $2?277, while stainless steel ingredient nickel traded at $24?365 versus $24?140. Zinc traded at $2?268 versus $2?230 at the close on Monday. - Reuters
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