Aluminium settled up 1.06% at 105.15 tracking LME aluminium which was the strongest performer on the LME, climbing 0.7 percent to close at $1,701 a tonne, after Service sector activity in Italy contracted at the slowest pace in three months in January easing concerns over the economic outlook of the euro zone's third-largest economy which raised the demand outlook for the metal. Market research group Markit said that its Italian services PMI rose to a seasonally adjusted 49.4 last month from a reading of 47.9 in December. Overall setiments remain weak as investors worried about weak demand in China and about the adjustment of the Chinese market to a drop in London prices when it reopens on Friday. Prices have been under heavy selling pressure in recent weeks as mounting concerns over the global economy dampened demand for growth-linked assets. The industrial metal is sensitive to the economic growth outlook because of its widespread uses across industries. Prices have fallen 4 percent since January. Aluminum prolonged its losing streak as supply-demand imbalance is likely to persist this year. Alcoa, the third biggest producer of the metal, reported an optimistic demand forecast for 2014. Consumption of the lightweight metal is expected to surge 7%, while demand in China may soar by 10% after jumping 11% in 2013. Despite strengthening demand, China still may see surplus of 400,000 tonnes, while the rest of the world will face a deficit of 300,000. As concerns alumina, the market is likely to witness surplus of about two million tonnes this year compared to 636,000 tonnes in 2013. Technically market is getting support at 104.5 and below same could see a test of 103.7 level, And resistance is now likely to be seen at 105.8, a move above could see prices testing 106.3.

Trading Ideas:

Aluminium trading range for the day is 103.7-106.3.

Aluminium gained as improving orders at U. S. factories helped revive demand expectations bruised by recent dismal Chinese and U. S. data.

Recent soft Chinese factory data has prompted caution about the outlook for economic growth and demand for metal

Chinese markets have been closed since last Friday for the Lunar New Year celebrations and are due to reopen on Friday.