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Zinc rallies, Comex Copper Gains On Stronger New Home Sales

NEW YORK, Jul 26, 2010 (Dow Jones Commodities News via Comtex) --

By Matt Whittaker
Of DOW JONES NEWSWIRES

Copper futures extended two-month highs Monday after U.S. home sales figures jumped by much more than expected, boosting expectations of demand for the metal in an already tightening market.

The most actively traded copper contract, for September delivery, was recently up 3.85 cents, or 1.2%, at $3.2235 a pound on the Comex division of the New York Mercantile Exchange. The intraday high of $3.2330 was the contract's highest point since May 14.

Prices for the metal--which is heavily used for piping and wiring in residences--ticked higher after data showed new home sales increased 23.6% in June to an annual rate of 330,000, beating economist expectations of a 3.7% gain to 311,000.

"Any bearish tint to the copper market was erased with that," said Bob Haberkorn, senior market strategist with Lind-Waldock in Chicago.

The data come at a time when copper prices are rising against a backdrop of tightening supplies as warehouse inventories continue to drop.

Inventories of copper stored in London Metal Exchange warehouses fell 3,375 metric tons Monday, leaving them at 416,275. They stood at more than 500,000 tons at the beginning of the year.

The weaker U.S. dollar--down as the euro gained modest support following European bank stress test results Friday--was also helping copper. A lower buck generally boosts the dollar-denominated metal by making it less expensive for buyers using other currencies.

Only seven out of 91 banks failed the tests, largely in line with expectations, and market participants were relieved that no new problems emerged.

As an industrial metal widely used in housing, electronics, automobiles and appliances, copper had been pressured worries about the global economy, including about the European debt crisis. Friday's test results helped ease some of those worries.

-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; [e-mail]

(END) Dow Jones Newswires

07-26-10 1022ET

http://news.tradingcharts.com/futures/4/6/142942464.html