Bareksa.com - London aluminium and zinc hovered near multi-month highs on Tuesday as the outlook for demand improved, while copper steadied after worries about a Chinese probe into metals financing pushed prices to one-month lows the session before.

Improving global demand prospects are helping support prices for zinc and aluminium in particular, led by stronger than expected consumption and tight supply - at least in the first half, said analyst Matt Fusarelli at AME Group.

"Generally economic performance is going better than people have expected ... And that will certainly help prices," he said.

Chinese zinc demand is seen growing by 8 percent this year, the fastest since 2010, driven by auto sales. It is expected to push the market into a deficit for the first time in several years, he said.

A small deficit in the aluminium market in the first half however, is expected to disappear, as large projects come on line, mostly in China, he added.

"The fundamentals of the ali market are substantially worse than zinc and copper."

Three-month zinc on the London Metal Exchange hovered at $2,128.75 a tonne by 0307 GMT, near 15-month peaks of $2,145 a tonne. AME Group sees the zinc market deficit this year at 100,000 tonnes.

LME aluminium slipped 0.4 percent to $1,903.75 a tonne, after hitting its highest in 9-1/2 months at $1,918 a tonne, fuelled by technical buying.

Across other metals, copper prices have been pressured by worries about financing after a probe into metals fraud at China's third largest port.

Qingdao Port has sealed its Dagang bonded metal storage area and suspended delivery of metals from the section, as authorities investigate an alleged fraud into financing of copper, aluminium and alumina.

CITIC Resources Holdings Ltd said on Tuesday that metal it stores at China's Qingdao port may be affected by the probe.

Three-month copper on the London Metal Exchange traded flat at $6,669 a tonne from the previous session when it dropped to $6,636 a tonne, which was its weakest since May 7.

The most-traded August copper contract on the Shanghai Futures Exchange fell 0.6 percent to 47,400 yuan ($7,600) a tonne.

More encouraging signals pointing to a global recovery emerged, backing up a brightening outlook for most base metal bar copper, which has been overshadowed by oversupply.

The U.S. macro economy is much closer to a normal state than it has been in five years, a Federal Reserve official said on Monday, adding that weak labour markets and low

inflation are supporting accommodative monetary policy. (Source : Reuters)