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Metals make breakout gains on growth bets

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Brent crude above $90 a barrel

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Yen on the ropes, slipping on crosses

By Tom Westbrook

SINGAPORE, April 9 (Reuters) - Industrial metals prices

extended their gains on Tuesday with expectations of a worldwide

manufacturing rebound, while Asian shares crept up a little more

cautiously ahead of this week's U.S. inflation data and a

crucial European Central Bank meeting.

MSCI's broadest index of Asia-Pacific shares outside Japan

rose 0.2%. Japan's Nikkei rose 0.6%.

Shanghai copper futures were up 1% at a two-year

high and have gained more than 10% in a month. Zinc made

a five-month high in Shanghai, where Aluminium made a

22-month peak on Monday.

Even iron ore, battered by China's property

downturn, steadied above $100 a tonne in Singapore.

"It's pretty much a China bet," said Vishnu Varathan, head

of economics at Mizuho Bank in Singapore.

"It's coincided with a global manufacturing bottoming, and I

think that plays well into China's industrial recovery. That

aspect of it is a broader-based story for metals."

On Monday, data showed German industrial production rising

more than expected in February.

Last week, data showed U.S. manufacturing growing for the

first time in one-and-a-half years. China's manufacturing

activity expanded for the first time in six months in March.

Precious metals have been soaring, too, with gold

hovering just below a record high of $2,353 hit on Monday. Spot

gold has risen nearly 14% this year.

Silver hit its highest since mid-2021 on Monday and

platinum has also shot higher. Brent crude is

below recent peaks but clinging above $90 a barrel at $90.62.

Chinese stocks have not joined the party, though Hong Kong's

Hang Seng was 1.2% higher in early trade and China

proxies such as the Antipodean currencies have been rallying.

The Australian dollar is up almost 2% in a week and

traded at $0.6605 on Tuesday. The New Zealand dollar

has regained a footing above $0.60 and hit a two-week high of

$0.6047 in morning trade.

China's yuan, down about 1.8% this year, has

found a floor around 7.3 to the dollar.

CPI AND ECB AHEAD

For global stock markets, bonds and currencies, the main

focus this week is on U.S. inflation data due on Wednesday and

the European Central Bank meeting on Thursday.

Expectations for U.S. rate cuts have been evaporating and

where in January markets had expected more than 150 basis points

in cuts, investors now are not even sure of half that many.

Annualised headline U.S. inflation is seen rising to 3.4% in

March from 3.2% a month earlier. U.S. two-year yields

, which track short-term interest rate expectations,

are their highest since late November at 4.801%, while ten-year

yields also hit 2024 highs of 4.46% on Monday.

The dollar has struggled to follow the rates higher,

however, with the euro firm in case of a hawkish

surprise from the ECB and the commodity currencies rallying.

The euro is at $1.0860.

The ECB is expected to hold interest rates, but flag a cut

the markets have priced for June.

"A stabilisation around $1.0800 in the near term remains

likely in EUR/USD, although drops to $1.07 or lower look more

likely than a break higher to $1.09/1.10," strategists at ING

said.

The yen, meanwhile, continues to face heavy pressure as

investors see any lags in global rate cuts as leaving the gap

open wide with Japan's near-zero interest rates.

At 151.87 per dollar, the yen is a whisker from

last month's 34-year low of 151.975. Against the euro, the yen

is at its weakest for three weeks at 164.96.

Japanese Finance Minister Shunichi Suzuki said authorities

will not rule out any options in dealing with excessive yen

moves, repeating his warning that Tokyo is ready to act against

the currency's recent sharp declines.

"We expect (Japan) to intervene above 152, but not

immediately on a break," Standard Chartered strategist Steve

Englander said in a note to clients.

(Editing by Himani Sarkar)