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$2.9994 - Comex Copper Lifted By Equities, Inventory Draws

Jul 06, 2010 (Dow Jones Commodities News via Comtex) -- By Allen Sykora

Of DOW JONES NEWSWIRES

Strength in equities on improved optimism about the global economy, coupled with a continued decline in warehouse inventories, pushed copper futures to their strongest level in a week early Tuesday.

Around 9:11 a.m. EDT (1311 GMT), copper for September delivery was 10.05 cents, or 3.5%, higher at $3.0165 per pound on the Comex division of the New York Mercantile Exchange.

"Stocks are helping it out," said Bob Haberkorn, senior market strategist with Lind-Waldock in Chicago.

Copper traders often look toward equities as a gauge of economic sentiment and thus demand for commodities. Analysts linked gains in global equities largely to an upbeat assessment of the economy by Australia's central bank, which left interest rates unchanged but warned of near-term inflation risks.

China's Shanghai Composite Index rose 1.9% overnight, and the September S&P 500 futures are 1.5% stronger in early trading.

Support for copper also came from a decline of 2,800 metric tons in London Metal Exchange inventories to 441,700, said John Gross, independent metals-industry consultant based in Exeter, R.I.

"We're having steady drawdown of the LME inventories," Gross said. "That has been consistent over the past several weeks."

Warehouse stocks are monitored as an indicator of demand for the commodity. These are falling to levels that may be hard for the market to ignore, with much of the previous focus on whether the global economy recovery would falter.

LME copper inventories are now at their lowest level since November, Gross said. They are down 32% since the mid-February peak of 649,543.

A New York trader said benchmark copper could get another boost if it can get above resistance around $3.05 to $3.10 on technical charts. Many traders evened up positions ahead of the long Fourth of July weekend and will be looking to re-enter the market, he added.

-By Allen Sykora, Dow Jones Newswires; 541-318-8765; [e-mail]

(END) Dow Jones Newswires

07-06-10 0920ET