Base metals surge on the LME

Base metals on the London Metal Exchange (LME) have closed higher after prices surged following another round of upbeat Chinese economic data that stoked investor hopes for better demand from the world's top metals consumer.

At the close of open-outcry trading in the London ring on Friday, LME three-month copper was 1.2 per cent higher on the day at $US7,274 a metric ton, it's highest closing price since early June.

Aluminum closed up 1.6 per cent at $US1,870 a ton.

All metals surged to post multi-week price highs during the session, with zinc closing some 2.5 per cent higher on the day at $US1,942 a ton, and tin posting its highest closing price in nearly four months at $US22,075 a ton.

Data early in the session showed China's July industrial production rose 9.7 per cent on the year against an expected nine per cent gain, while retail sales registered a 13.2 per cent gain year-on-year in July. China's Consumer Price Index rose 2.7 per cent on-year last month. This came after followed Chinese trade data on Thursday that showed a surge in copper imports in July.

China is the world's top consumer of base metals and accounts for around 40 per cent of global demand for copper. Concerns over slowing economic activity in the region have weighed on base metal prices in recent months.

Fears rose that base metal demand may be sapped as Chinese authorities moved to rearrange the domestic economy and some growth readings from the nation have disappointed.

Indeed, analysts at Barclays on Friday noted that, according to their figures, the base metals group had been one of the worst-performing commodity sectors in 2013, 'second only to precious metals'.

But this week's slew of positive economic readings from the nation have helped reversed some of that negative sentiment.

Next week, macro-economic data in the US including inflation and manufacturing data will be eyed by investors for clues regarding whether or not the Federal Reserve may move to scale back its monthly bond purchases as soon as September. The Fed's quantitative-easing program has been a support for base metals as a form of economic stimulus.