- New UK premier, stimulus hopes fuel risk-on trades
- GS hikes nickel forecast by 29 pct to $11,000 in three months
- GS hikes three-month zinc view by 15 pct to $2,300
(Adds details, quotes; changes dateline from MELBOURNE)
Zinc touched a 13-month peak and nickel hit the highest since last October on Tuesday as speculators piled in after the selection of a new prime minister for Britain and on hopes of more stimulus.
Increased risk appetite among investors sparked a broad-based rally on the London Metal Exchange, but some analysts remained wary because little had changed in the supply-demand picture.
"I'm a bit nervous about these rallies, they do seem to be driven by investor buying rather than any change in the fundamentals," said Caroline Bain, senior commodities economist at Capital Economics in London.
"At the beginning of the year we were really positive, but prices have already risen beyond our end-of-year forecasts."
Benchmark LME zinc CMZN3 had climbed 1.9 percent to $2,181 a tonne by 1051 GMT, the highest since June 10 last year.
Zinc has been investors' favourite, surging 35 percent so far in 2016 as closures and suspensions of major mines tightened the supply picture.
Nickel CMNI3 was the best LME performer on Tuesday, shooting up 3.4 percent to $10,385 after touching $10,435, the highest since Oct. 29 last year.
Nickel climbed for a third day on concerns that the Philippines, China's top supplier of nickel ore used in making stainless steel, may shut some mines after a month-long review. Nickel prices in London have jumped more than 7 percent since the country announced the review on July 1.
"At the very least there is a reasonable portion of Philippine supply risk and at the margin that's going to tighten the nickel trade," said analyst Daniel Morgan at UBS in Sydney.
Morgan sees prices steady to higher from current levels. Goldman Sachs hiked its nickel price forecasts by 29 percent to $11,000 for three months out, and for zinc by 15 percent, as it boosted price expectations for the next year.
Adding to the lift on Tuesday, some China steel mills were ordered to cut output. That sent Chinese steel futures SRBcv1 up more than 3 percent at one point and iron ore futures DCIOcv1 limit up.
Among other metals, LME copper CMCU3 climbed 1.8 percent to $4,833.50, adding to a 0.8 percent gain from the previous session.
Metals have heated up partly on expectations China may roll out fresh stimulus measures to counteract uncertainty in some of its export markets.
PRICES
Three month LME copper CMCU3 Most active ShFE copper SCFcv1 Three month LME aluminium CMAL3 Most active ShFE aluminium SAFcv1 Three month LME zinc CMZN3 Most active ShFE zinc SZNcv1 Three month LME lead CMPB3 Most active ShFE lead SPBcv1 Three month LME nickel CMNI3 Most active ShFE nickel SNIcv1 Three month LME tin CMSN3 Most active ShFE tin SSNcv1 ($1 = 6.6880 Chinese yuan renminbi)
