DJ BASE METALS: Lead Jumps; Nickel,Copper May Seen Weakness

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London Metal Exchange base metals traded higherWednesday, with lead touching a fresh record high, but market participantsquestion whether major follow-through buying in nickel or copper will emergeovernight.

Three-month lead jumped to a fresh record high of $3,015 a metric ton drivenby commodity trade advisory buying and technical buying, but has eased to a PMkerb of $2,979/ton.

"Calling an upside price target is difficult as prices are already inuncharted territory," said one LME trader. But other analysts noted that untilthe market tightness eases, prices will continue to climb higher.

A combination of falling LME inventories - down nearly 5% since the start ofJuly as well as supply concerns in China - the world's largest lead producer -continue to underpin prices.

Elsewhere, three-month copper was modestly boosted Wednesday but was unableto mount the key $8,000/ton price level.

Concern that problems in the U.S. subprime mortgage sector will spill overinto the wider economy have also begun to unsettle nerves in the metal markets,according to analysts.

But copper remains underpinned by industrial action and inventory draw-downs,said Standard Bank. And traders said future price direction depends ondevelopments in South America and ongoing labor negotiations there.

Plans at Chilean state copper miner Corporacion Nacional del Cobre's Andinadivision to restart mining operations were delayed Wednesday morning afterprotesting contract workers blocked buses carrying workers from leaving aterminal, according to the company. Mine operations were halted Monday after aworker on his way to the mining complex was injured by protesting contractworkers.

Contract workers went on strike 16 days ago and have left Codelco with a $20million bill for damages after protests and illegal occupations. Codelco is theworld's largest copper producer, with an annual output around 1.8 millionmetric tons.

Meanwhile, three-month nickel rose due to consumer and technical buying, saidone LME trader, after falling some 11% earlier this week. But "we're onlyseeing a bit of a bounce after such a big fall Tuesday," said an London-basedanalyst.

Slowing demand for stainless steel, particularly in China, technical sellingand rising LME inventories have added to price pressure. Nickel stocks haveclimbed roughly 13% from month-ago levels while LME nickel prices have declined18% from month-ago levels.

"Nickel prices were supported by technical buying but the trend of weaknessis expected to continue," said the LME trader. Analysts eye $30,000/ton as thenext support level.

And three-month aluminum was modestly supported as "take over action filteredin the market," said the trader. News that Rio Tinto Ltd. may launch a $34billion takeover offer for Canada's Alcan Inc. circulated the marketsWednesday.

Prices in dollar a metric ton. 3 Months Metal Bid-Ask Change from Tuesday PM kerb Copper 7940.0-7941.0 Up 30 Lead 2979.0-2980.0 Up 45 Zinc 3475.0-3480.0 Up 75 Aluminum 2833.0-2834.0 Up 26 Nickel 33250.0-33300.0 Up 610 Tin 14150.0-14160.0 Up 10 Aluminum Alloy 2230.0-2240.0 Up 20 Aluminum Alloy 2250.0-2260.0 Up 25

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