* LME copper stocks near 10-year lows
* Zinc stocks at lowest since 2007 (Updates with closing prices)By Pratima DesaiLONDON, Feb 27 (Reuters) - Copper rose on Wednesday asexpectations of strong demand growth from top consumer Chinaboosted sentiment, but the rally was capped by strong technicalresistance at eight-month highs.Benchmark copper on the London Metal Exchange closedup 0.2 percent at $6,506.50 a tonne after an earlier high of$6,531. Prices of the metal used widely in power andconstruction hit their highest since July on Monday at $6,540.Copper's recent gains have been fuelled by Chinese banksmaking the most new loans on record in January, totalling 3.23trillion yuan ($484 billion), as policymakers try to jumpstartsluggish investment and prevent a sharper slowdown. "We turned more positive after the credit data for January,"said ICBC Standard Bank analyst Marcus Garvey, adding thatseasonal influences meant the January data "need to be takenwith a pinch of salt"."But if you look at the composition of the numbers, theyindicate potential for a less aggressive push on deleveraging."
BONDS: China's local governments issued 418 billion yuan indebt in January, up sharply from 63.8 billion yuan in December. "There isn't usually much, if any, government bond issuancein January, but this year there is," ICBC Standard Bank's Garveysaid. "We're not going to see a huge round of infrastructurestimulus this year, but it could at least potentially match therhetoric heard at the end of last year."
TECHNICALS: Copper's rally stalled on Monday at $6,540, aFibonacci resistance level. Traders say that level may takeseveral attempts to breach and will need a trigger, which couldbe some sort of resolution to the U.S.-China trade dispute.STOCKS: Copper inventories in LME-registered warehouses,near 130,000 tonnes, are close to their lowest in 10 years.
Worries about a tight LME market are exacerbated bycancelled warrants, metal earmarked for delivery, at more than80 percent of the total. One company holding large amounts of warrants has alsocontributed to a premium of $39.50 a tonne for the cash contractover the three-month contract, from a discount around $20 atonne earlier in February. ZINC: Stocks of zinc under LME warrant at 67,825 tonnes areat their lowest since 2007, while cancelled warrants at morethan 22 percent are significant.As with copper, large holdings of zinc warrants havecontributed to a tight market and created a premium of around$30.50 a tonne for the cash over the three-month contract from a near $10 a tonne discount earlier this month.Three-month zinc ended up 0.2 percent at $2,745 atonne.PRICES: Aluminium gained 0.6 percent to $1,922 atonne, lead added 2.1 percent to $2,136.50, tin slipped 0.3 percent to $21,530 and nickel rose 0.7percent to $13,055.
($1 = 6.6796 Chinese yuan renminbi)<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Top Base and Precious Metals Analysis - GFMS ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Pratima DesaiAdditional reporting by Peter HobsonEditing by Jan Harvey and David Evans)