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Copper Advances in New York as Weaker Dollar Bolsters Demand

By Anna Stablum

Dec. 9 (Bloomberg) -- Copper advanced in New York after the dollar declined on improving investor appetite for higher- yielding assets.

The U.S. Dollar Index, a gauge against six major currencies, fell as much as 0.6 percent, increasing the allure of dollar-denominated commodities for holders of other monies.

“If the dollar weakens further this should help base metals,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by phone.

Copper for March delivery added 1.8 cents, or 0.6 percent, to $3.183 a pound as of 8:55 a.m. on the New York Mercantile Exchange’s Comex unit. Copper for delivery in three months was unchanged at $6,976 a metric ton on the London Metal Exchange.

Copper declined earlier today on concern about the strength of the global economic recovery after Japan’s economy expanded less than initially reported. Gross domestic product rose an annualized 1.3 percent, slower than the 4.8 percent reported last month, the Cabinet Office said in Tokyo.

Copper has more than doubled this year, partly bolstered by speculation that improving economies will consume more metal.

The U.S. Dollar Index slid 6.5 percent this year as the Federal Reserve held interest rates near zero to revive the country’s economy.

“The Fed is choosing a policy of extreme caution,” Alex Heath, head of industrial-metals trading at RBC Capital Markets in London, said by phone. “That is what is keeping the dollar under pressure.”

Copper Inventories

Copper inventories in warehouses monitored by the LME rose for a 27th day, to 458,500 tons. They have expanded 35 percent this year. Canceled warrants, or metal booked for delivery from warehouses, fell 28 percent to 1,050 tons. That’s equal to 0.2 percent of total stockpiles, down from 21 percent in May.

The inventory gain “matters little at the moment with funds and other speculators still in the driver’s seat,” said Andrey Kryuchenkov, an analyst at VTB Capital in London.

Among other LME metals for three-month delivery, nickel rose 0.7 percent to $16,270 a ton. First Quantum Minerals Ltd. agreed to buy BHP Billiton Ltd.’s shuttered Ravensthorpe nickel mine in Australia for $340 million with a goal of restarting operations within 18 months of the purchase being completed.

Aluminum rose $10 to $2,173 a ton, zinc gained 0.1 percent to $2,330 a ton and lead gained 0.6 percent to $2,301.6 a ton. Tin rose 0.5 percent to $15,224 a ton.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azro.JrpdJao