Zinc settled up 1.41% at 129.80 despite greenback strengthened after sources indicated that the US Federal Reserve may trim QE3 again in its January policy meeting. Zinc prices recovered from the previous day's fall amid speculation a slowing economy in China will reduce demand for the industrial metal. Data on Monday showed that China's economy expanded at an annual rate of 7.7% in the fourth quarter, down from 7.8% in the three months to September. A separate report showed that industrial production in China rose by an annualized rate of 9.7% in December, compared to expectations for a 9.8% increase, after a 10% gain in the previous month. The next slice of Chinese economic data to come out will be the HSBC preliminary purchasing managers' index for January, due on Thursday. The People's Bank of China conducted seven-day reverse repos worth RMB 75 billion and RMB 180 billion of 21-day reserve repos following its cash injection via SLF, injecting a net RMB 255 billion in a single day, a high last seen during 2013's Chinese New Year holiday. In addition, the PBOC will also auction 40 billion of three-month treasury deposits on Thursday, to ease liquidity tightness around the Chinese New Year holiday. Chinese stock market closed higher as a result. Technically market is under fresh buying as market has witnessed gain in open interest by 1.24% to settled at 2943 while prices up 1.8 rupee, now Zinc is getting support at 128.1 and below same could see a test of 126.3 level, And resistance is now likely to be seen at 130.8, a move above could see prices testing 131.7.

Trading Ideas:

Zinc trading range for the day is 126.3-131.7.

Zinc ended with gains buttressed by the People's Bank of China's capital injection.

In Europe, the ZEW Economic Sentiment for Germany edged lower to 61.7 in January, down from an eight-year high of 62.0 seen in December 2013

IMF subsequently raised China and the world's GDP growth prospects for 2014 and 2015.