With the world recovering from last year's economic collapse, UBS Securitiesanalysts Brian MacArthur and Onno Rutten have made major upgrades to theircommodity price forecasts and mining stock valuations.

In a note to clients, they wrote that global lead indicators suggest theworld is entering a cyclical recovery, even if China is excluded. And in thecase of China, they believe the country is less overstocked than some peopleexpect, even after a huge wave of metal imports through the spring andsummer.

They wrote that supply conditions for most metals look tight after manycompanies cut production and various operations face supply challenges. And theybelieve global inventories could be stretched once the rest of the world (apartfrom China) resumes its normal consumption patterns.

"Metal demand has historically sharply rebounded in the 6-18 months after arecessionary trough, and then normalized by 18-24 months after the trough," theywrote.

The analysts upgraded their 2010 price forecasts for nickel (up 43% toUS$10.00/lb), copper (up 32% to US$3.30/lb), zinc (up 13% to US90¢/lb), andaluminum (up 19% to US95¢/lb) among others.

As a result, they also raised their price targets on miners across the basemetal space, and four of them were upgraded to "buy" from "neutral": Equinox Minerals Ltd., Quadra Mining Ltd., FNX Mining Company Inc., and Sherritt International Corp. Their favourite names are First Quantum Minerals Ltd., Freeport-McMoRan Copper & Gold Inc., and Teck Resources Ltd.