METALS-Market rallies on looming Fed move after U.S. data

* U.S. non-farm payrolls unexpectedly fall in September

* Dollar volatile, euro erases gains after Juncker comments

* Analysts predict action from Fed to boost economy

Industrial metals rallied on Friday, with copper hitting its highest in over two years for a
third straight day as a surprise fall in U.S. jobs strengthened talk of fresh moves to boost 

the world's biggest economy.

Benchmark copper CMCU3 jumped to $8,349.50 a tonne, its highest since mid-July 2008 

and ended the day at $8,300 a tonne, up 2.5 percent from $8,100 a tonne on Thursday. 

"It looks like weak economic data is actually positive for commodities as it boosts 

expectations of quantitative easing out of the United States which has been one of 

the motivators of the market recently," analyst Daniel Brebner at Deutsche Bank said.

The U.S. economy unexpectedly shed jobs in September for a fourth straight month 

as government payrolls fell. Nonfarm payrolls dropped 95,000, against a market 

expectation of an unchanged number. 

Speculation about the U.S. Federal Reserve stepping in with more quantitative easing 

to bring life to the economy has been fuelling metal prices as it bolsters the demand 

outlook while hitting the dollar.

"It's definitely a strong possibility that the Fed will do something to assist, 

to ease further," analyst David Thurtell at Citi said. "But if you look at world industrial 

production, it's now above where it was prior to the crisis -- hence the high copper price."

The U.S. dollar slid to a 15-year low below 82 against the Japanese yen, and fell against 

other currencies, making industrial metals cheaper for non-U.S. currency holders. 

Copper has risen more than 30 percent since hitting an eight-month low in June, at 

the forefront of a rise in metals prices that saw tin hit a record high this week.

TIGHT SUPPLIES

Copper is also benefiting from a tightening market, where stocks in LME warehouses 

have tumbled more than 30 percent since the middle of February.  Friday's data showed 

LME stocks down 1,450 tonnes to 372,000 tonnes, having fallen from seven-year highs 

above 555,000 in late February.

Talk of launching physically backed exchange-traded copper products (ETPs) looks to be a 

cause of unease as consumers think it could reduce the availability of the metal. 

"Over the course of the next quarter if that become a reality the introduction of that 

element of demand could push prices higher," Brebner said.

The supply side worries, along with an uncertain demand outlook as well as the sustainability 

of high metal prices, will be at the heart of this year's LME Week, the annual gathering of 

the metals industry in London, due next week.

Aluminium CMAL3 rallied more than 4 percent to hit $2,422 a tonne, its highest since April 20 

and closed at $2,420 a tonne versus Thursday's close of $2,326 a tonne.

"Aluminium is finally catching up with copper," said one LME trader, adding that prices had 

failed to match copper's rise in recent days.  Among other metals, tin rose to $26,350 a tonne 

versus Thursday's close of $25,600, short of Wednesday's record peak at $26,790, underpinned 

by tight supply from top exporter Indonesia and low stocks. 

Stainless steel material nickel closed at $24,400 a tonne from Thursday's close of $23,900, 

while battery material lead rose to $2,270 a tonne versus $2,209. Lead inventories 

slipped 900 tonnes but remain near 10-year highs at around 198,400 tonnes.

Zinc gained to $2,289 a tonne versus $2,261 a tonne. 

Metal Prices at 1604 GMT
Metal            Last      Change  Pct Move   End 2009   Ytd Pct

move
#VALUE!
 LME Alum      2420.00       94.00     +4.04    2230.00      8.52
 LME Cu        8305.00      205.00     +2.53    7375.00     12.61
 LME Lead      2272.00       63.00     +2.85    2432.00     -6.58
 LME Nickel   24375.00      475.00     +1.99   18525.00     31.58
 LME Tin      26345.00      745.00     +2.91   16950.00     55.43
 LME Zinc      2290.00       29.00     +1.28    2560.00    -10.55
 SHFE Alu     15975.00      105.00     +0.66   17160.00     -6.91
 SHFE Cu*     60610.00       10.00     +0.02   59900.00      1.19
 SHFE Zin     17930.00       55.00     +0.31   21195.00    -15.40
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07. Source: Reuters