Zinc snaps four days of declines

Zinc snapped four days of declines in London as some investors judged that sales linked to changes in a commodity index left the price undervalued given a slump in inventories last year.

Dow Jones & Co began adjusting the weightings of the 19 futures in the Dow Jones-AIG Commodity index this week. The weighting of zinc, the second-best index performer after a 122 percent gain last year, will be cut to 2.8 per cent from 4.9 per cent.

"It's a tentative recovery,'' said Kevin Norrish, an analyst at Barclays Capital in London said today in a telephone interview. "Buyers need to be cautious about prices of zinc and nickel as the index reweighting continues all week.''

Zinc for delivery in three months on the London Metal Exchange gained $80, or 2.3 percent, to $3,600 a metric ton as of 11:42 a.m. local time. Yesterday, the metal used to galvanise steel fell the most since June 13 after LME-monitored inventories had their biggest gain in four months.

The price of zinc more than doubled last year, trailing only nickel on the LME. Copper increased $95, or 1.7 percent, to $5,720 a ton today, and nickel gained $850, or 3.3 percent, to $31,250, reversing yesterday's drop.

Stockpiles of zinc gained 175 tons, or 0.2 percent, to 94,250 tons, the LME said in a daily report.