Base metals higher on China stimulus bets

Copper and nickel rose as hopes for more stimulus measures resurfaced after Chinese traders, returning from a week-long holiday, digested worse-than-expected trade data.

Also helping the metals, oil held on to recent gains, while China's central bank fixed the yuan at a much stronger rate. A stronger yuan reduces the risk that China will export deflation to the world.

"There's a sense of calm. The (China) trade stats ... may be ... fuelling hopes for more stimulus that will bolster demand," said Societe Generale analyst Robin Bhar.

"There's more scope for risk fears to come back ... and metals are still well supplied ... but we're building a floor, the bad news is in the price."

Three-month copper on the London Metal Exchange ended up 1.4 per cent at $US4562 a tonne, after ending last week down more than 2 per cent.

China's January exports fell for a seventh straight month while imports tumbled for a 15th straight month. Exports declined even though China allowed the yuan to weaken sharply, underlining the weakness in global growth.


"It's all up to how the yuan will perform in the days ahead. The financial community is still very sceptical but ... some metals (have) already rebalanced (on the supply side) so I think we have some days of gains ahead," said Gianclaudio Torlizzi, partner at Italy-based metals consultancy T-Commodity.

Elsewhere, nickel rose 5.6 per cent to $US8260, reversing a more than 4 per cent fall last week, when prices slumped to their lowest in 13 years.

"While some mine culls have now come through, we believe they have not been sufficient to rebalance the market yet. As such, we remain cautious nickel for now," said Bank of America-Merrill Lynch in a note.

Lead ended down 1 per cent at $US1831, having earlier hit its highest since July at $US1865. Cash lead traded at a premium of $US10.25 a tonne to the three month price , the highest since late December and indicating possible supply tightness.

Zinc closed down 1.2 per cent at $US1685. The global zinc market deficit widened to 25,400 tonnes in December from a deficit of 20,000 tonnes in November, data showed.

Tin ended down 0.6 per cent at $US15,305, while aluminium closed up 0.7 per cent at $US1511, having earlier on Monday hit its highest since February 5 at $US1525.