September 1, 2016 / 3:10 AM / 4 years ago

METALS-LME zinc, lead, tin, hit 2016 peaks as China factories brighten

* China manufacturing activity unexpectedly expands in August

* Zinc market outlook remains bright -Triland

* Coming up: euro zone Markit manufacturing PMI final at 0800 GMT (Adds comment, detail; updates prices)

By Melanie Burton

MELBOURNE, Sept 1 (Reuters) - London zinc, lead, and tin all rallied to their highest in more than a year on Thursday after a better than expected manufacturing report from China in August prompted buying across metals, especially those constrained by supply.

London nickel rallied more than 1 percent while even glut-hit copper climbed off two-month lows.

Activity in China’s manufacturing sector unexpectedly expanded at its fastest pace in nearly two years in August as construction boomed, suggesting the economy is steadying in response to stronger government spending.

China is the world’s biggest user of metals.

“It allows us to be more confident that the economy is getting better,” said chief investment officer Jonathan Barratt of Ayer’s Alliance in Sydney.

London zinc rallied to its highest since May 2015, sister metal lead rose to its most expensive since June 2015 and tin stopped just short of the $19,000 mark but still reached its highest since February 2015.

Gains came despite a dollar that wavered against the yen and euro, its advance put on hold ahead of the closely-watched U.S. non-farm jobs report on Friday which is expected to shape the market’s near-term interest rate expectations.

A stronger dollar curbs demand for commodities because it cuts into their affordability for those paying with other currencies.

A reversal in dollar fortunes after a rate rise in the coming months, could add heat to metals, Barratt added.

Three-month copper on the London Metal Exchange rose 0.5 percent to $4,640.50 a tonne by 0713 GMT, after ending little changed in the previous session. Prices on Tuesday fell to the weakest since June 24 at $4,600 a tonne amid mounting supply, which traders said marks a near term floor.

LME exchange stocks have jumped by 40 percent in the past fortnight. MCUSTX-TOTAL

Shanghai Futures Exchange copper rose 0.7 percent to 36,530 yuan ($5,469) a tonne.

ShFE zinc struck 18,390 yuan a tonne, the highest since September 2011 as mine supply tightens in China, dragging up Shanghai lead by 4 percent as it broke through technical barriers.

“No technical sign yet of the uptrend weakening so days ahead are still bright for zinc it seems,” said broker Triland in a note.

Elsewhere, a major aluminium producer has offered Japanese buyers a premium of $82 per tonne for October-December primary metal shipments, down 9-12 percent from the previous quarter, three sources said.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin ($1 = 6.6799 Chinese yuan renminbi) (Reporting by Melanie Burton; Editing by Joseph Radford)

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