* Zinc stocks at highest in 16 years
* Lead price touches 2-month high
By Silvia Antonioli
LONDON, July 7 (Reuters) – Copper rose on Thursday to its highest in nearly three months as expectations of increasing demand from top consumer China and upbeat employment data from the United States, the world’s largest economy, boosted market sentiment.
A strong trigger for higher levels in afternoon trade was European Central Bank President Jean-Claude Trichet who said the ECB “has decided to suspend rating requirement for Portugal”. .
Benchmark copper on the London Metal Exchange ended at $9,740 a tonne from $9,521 a tonne at the close on Wednesday. The metal used widely in power and construction earlier hit $9,758 a tonne, its highest since April 12.
U.S. private employers added far more jobs than expected in June, bouncing back from a surprise slump the month before.
“The market is in a risk-on mode,” said Nick Moore, global head of commodity strategy at RBS Global Banking and Markets.
“(There are) expectations that the Chinese will come back to the market, they can’t keep drawing down inventories … Trichet’s comments on the ECB not applying rating agency numbers too closely gave a bit of breath to the EU situation.”
Financial and commodity markets have come under pressure in recent days from the Greek crisis and rating agency downgrades of the country’s sovereign debt.
Trichet’s comments also helped the euro to pare losses against the dollar, which when is falls makes metals priced in the U.S. currency cheaper for holders of other currencies.
Support was also gleaned from strike-related disruptions at some of the world’s biggest copper mines and worries about a deficit of copper in the second half of the year.
“We see further upside in copper prices despite the recent rally,” Goldman Sachs said in a note.
“We expect … demand growth will be sufficient to substantially tighten the copper market over the next year, especially as Chinese buyers continue to return to the market.”
Inventories of copper in LME-approved warehouses at 461,950 tonne, the lowest since April 21. They are down more than 3 percent since a peak on June 9. MCUSTX-TOTAL
Copper stocks have also fallen in recent weeks in Asian warehouses underlining that a pick up in demand may be underway. CU-STX-SGH.
Inventories of zinc MZN-STOCKS in LME-registered warehouses hit their highest in 16 years at 871,050 tonnes.
“The problem with zinc is that it is a badly over supplied market,” said Daniel Smith, an analyst at Standard Chartered.
“Demand is not subdued but the producers have not been disciplined.”
Zinc , used to galvanize steel closed at $2,412 a tonne from $2,380 Wednesday’s close.
Battery material lead , ended at $2,721 from $2,700. Earlier, it touched a peak of $2,730 a tonne, its highest since mid-April.
“The long-term perspective is very positive for lead,” Nic Brown, head of commodity research at Natixis said.
“We may see an increase in demand for lead for batteries for new cars and replacement batteries.”
Tin ended at $27,540 a tonne from $26,745 and aluminium untraded at the close, was bid at $2,590 from $2,556.
Nickel closed at $23,900 from $23,380. (Additional reporting by Tasim Zahid and Pratima Desai; editing by William Hardy)