Zinc was strong, ending just off its intraday high at $0.5375/lb., up nearly 5 cents. Aluminum hit 97 cents before beating a sharp retreat back to $0.9479/lb., up three-quarters of a penny, while lead shot up to $0.6728/lb., up 3¼ cents.

Copper led the industrial metals on a tear yesterday, shooting up the most in two years, as traders became consumed with optimism generated by the Federal Reserve.

The metal is up 25% so far during this comeback week.

The price of copper is also likely to be supported by “supply-side vulnerability,” according to analysts at Barclays Capital. Much of its runup of the past several years has to do with mine accidents, labor unrest and lower ore grades, all of which left miners scrambling to meet demand.

But, “Given the worsening sentiment about the global economy, this rally could well be short-lived,” Barclays added. “The demand picture for metals consumption continues to remain weak.”

“We have just had a massive sell-off and prices have gone well into the cost curves for a lot of the commodities, particularly nickel and zinc,” said Jim Lennon, analyst at Macquarie Bank.

Chile, the largest copper producing country, reduced its 2008 copper output forecast for the second time since July, this time to 5.45 million metric tons, mostly due to operational issues. The Chilean Copper Commission also said falling prices may slow the pace of investments in some of the nation’s mining projects after 2009.

China’s central bank chipped in, slashing banks’ benchmark lending and deposit rates by 0.27%, the third cut in six weeks. “There was clear evidence that growth in China was slowing both in data and officials saying that … we’ll see more moves to stimulate growth over the next six months or so – everywhere but specifically in China,” said Robin Bhar, a metals analyst at Calyon in London.

Source: Industrial metals agree, All push higher on Fed move