The bank cautioned, however, that prices were vulnerable. "Some of the drivers appear unsustainable and it will not be until enddemand conditions improve towards the end of the year, in our view, that there will be a concrete recovery in prices," it said, forecasting nickel prices by late-2009 at $12,800 a tonne.
Other base metals also rose boosted by stronger Chinese, US and Japanese manufacturing data. Copper rose 3 per cent to $5,120 a tonne while aluminium rose 2.3 per cent to $1,670 a tonne. Zinc and lead gained more than 3 per cent.
Oil thrashed about in a volatile session, with crude paring its gains after closely followed weekly US government data showed a sharp rise in stocks of petroleum products.
Crude inventories fell for the fourth consecutive week, according to data from the Energy Information Agency, the statistical arm of the US Department of Energy.
But this was overshadowed by the sharp rise in gasoline, diesel and heating oil. Crude stocks dropped 3.7m barrels to 350m barrels while gasoline and distillates inventories rose on stronger imports and weaker demand, with the former rising 2.3m barrels and the latter by 2.9m barrels. Nymex August West Texas Intermediate fell 58 cents to settle at $69.31 a barrel. ICE August Brent fell 51 cents to close at $68.79 a barrel.
Michael Lewis, head of commodities research at Deutsche Bank in London, noted the continued mirroring between oil prices and other asset classes, calculated using data starting in August 2008 that each 50-point move in the US S&P 500 index is approximately a $7-a-barrel move in the West Texas oil price.
In the agriculture market, raw sugar prices hit a fresh three-year high for a front- month contract, trading as high as 18.01 cents per pound on the day.
Industry sources said Cargill, the US giant agricultural trading house, took delivery of a huge 1.3m tonnes against the ICE July raw sugar contract, which expired on Tuesday.
Sugar prices later fell after Brazil reported a large increase in sugar output. In afternoon trading, ICE October sugar was down 0.7 per cent to 17.33 cents.
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