Industrial metal sentiment weakened further Thursday as Greek debt concerns and disappointing data from China continued to erode risk confidence; copper slid to a three week low while aluminium, lead, nickel and zinc touched their lowest levels in a month. A mix of technical and stop-loss selling saw the base metals down a net 2.6% at the day’s lows shortly after the start of US trade; the precious complex was off 1.6% as silver fractured technical support at the bottom of its recent range while platinum tested towards the $1600 mark.

However, the metals recovered from their lows across the remainder of the day following the release of better-than expect jobs, housing and manufacturing data. Jobless claims stood at 348K versus an estimated 364K, Housing Starts improved from 0.69M to 0.7M and the Philly Fed Manufacturing Index improved from 7.3 to 10.2. The base metals finished the day down 1.3% while the precious metals were up 0.3% as palladium bounced, trading just short of $700/oz.

The positive US data also gave equities a lift with the Dow and S&P500 both ending up around 1% in contrast to European markets as the FTSE and Stoxx 50 Index closed down around 0.2%. The dollar gave back ground with the DXY settling down 0.4% having been up 0.5%.

Upbeat equity sentiment has continued overnight following the positive close to US markets yesterday. Expectations have increased that the Eurozone officials will approve the next tranche of financial aid for Greece and are considering cutting interest rates on emergency loans and using contributions from the ECB to plug the current financing gap in the second bail-out. Inflation data from the US today is also expected to be tame with CPI forecast at 0.3%; currently the Nikkei is up 1.5% and the MSCI Asia Pacific Index 1.3%.

Other data today will show German PPI, Eurozone Current Account Balance and US Leading Index.

In spite of the gains in equities metal market sentiment has been relatively subdued; turnover on Select for example is considerable lower than yesterday with around 3,500-lots of copper traded at the time of writing versus well over 7,000-lots this time yesterday. The base metals are currently up a net 0.1%, the precious metals are flat as modest gains in gold, silver and platinum have been negated by palladium as the metal has run into pressure having failed to reclaim the $700 mark.

As a whole the sector will be looking to today’s inflation readings and wider equity and currency market reaction for direction; however the sector remains vulnerable to further weakness due to negative technical’s and weak fundamentals – ILZSG report yesterday showed zinc and lead were oversupplied last year. Gold and silver have bucked the trend with both still finding support at $1700 and $33 respectively as the metals benefit from investment diversification.

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