- Zinc up a second day, extending rebound from one-month low
- Investors await policy decisons from Fed, BOJ on Wednesday
Zinc led gains among most base metals and mining stocks climbed to a three-week high as the dollar weakened before major central bank meetings.
Zinc extended a rebound from a one-month low, rising as much as 1.3 percent in London, while copper erased an earlier loss. The FTSE 350 Mining Index advanced for a second day, led by BHP Billiton Ltd., the world’s biggest miner.
The Bloomberg Dollar Spot Index extended Monday’s retreat from a seven-week high, making raw materials priced in greenbacks cheaper for buyers using other currencies. Recent weak U.S. economic data has pushed the odds of the Federal Reserve raising interest rates on Wednesday down to 20 percent, from more than 40 percent in late August. The Bank of Japan will also announce its policy decision tomorrow.
The gain in metals is “a reaction to a weaker dollar," Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by e-mail. “Ahead of key meetings from the Bank of Japan and Federal Reserve, most markets are on hold with the dollar-sensitive commodities looking toward the greenback for direction."
Zinc for the delivery in three months was up 1.2 percent at $2,277 a metric ton by 9:50 a.m. on the London Metal Exchange. Prices have rallied 41 percent this year, the most among the bourse’s six main metals, amid expectations for a supply shortage.
The FTSE gauge of mining stocks climbed as much as 1.5 percent to the highest since Aug. 30. BHP climbed 2.1 percent in London and Rio Tinto Group gained 1.5 percent.
In other metals and mining news:
- Lead, nickel and tin also rose on the LME, while aluminum was little changed. Copper lost 0.1 percent to $4,772.50 a ton, after earlier falling as much as 0.6 percent.
- Rio Tinto is becoming more optimistic on the outlook for demand in China after recent data pointed to a pickup in the construction market, according to Chief Executive Officer Jean-Sebastien Jacques.