BASE METALS: Copper Ends Higher On Weak Dollar

NEW YORK, May 26, 2011 (Dow Jones Commodities News via Comtex) -- Copper ended a touch higher as a weak dollar balanced damping influence of downbeat economic data.

The most actively traded contract, for July delivery, gained 0.40 cent, or 0.1%, to settle at $4.1110 a pound on the Comex division of the New York Mercantile Exchange.

May-delivery copper ended up 0.50 cent, or 0.1%, at $4.1070 a pound.

A weaker dollar fanned demand for dollar-denominated copper futures among investors holding foreign currencies, as the contracts appear cheaper when the greenback eases. The ICE Dollar index, which tracks the greenback versus a basket of foreign currencies, was recently at 75.612, down from 75.900.

"The dollar being weaker does help out, but its been a very choppy day in commodities," said Rob Kurzatkowski, commodity analyst at optionsXpress.

Earlier in the day, copper prices had slumped on weaker-than-expected employment data. Initial unemployment claims increased by 10,000 to a seasonally adjusted 424,000 in the week ended May 21, the Labor Department said Thursday in its weekly report. Economists had forecast a decline of 4,000.

Traders look to employment numbers as a gauge of future copper demand. Employed consumers have more money to spend on goods like air conditioners, cars and iPads, all of which contain copper.

The U.S. economy grew at a lackluster 1.8% in the first quarter of 2011, after growing by 3.1% in the final quarter of 2010, according to the second estimate of economic growth by the Commerce Department. The latest gross domestic product figure was exactly the same as the government's first estimate.

Copper prices slumped to negative territory on the downbeat data, interrupting what has been a two-day rally for the red metal. Copper prices had caught a boost from bullish trade recommendations by two major investment banks Monday that continue to lure investors to the commodity space.

"I think everyone's a little cautious about this upside move, no one is rushing in after the big move yesterday," said Bob Haberkorn, senior market strategist at Lind-Waldock.

Elsewhere, operations at Chile's El Teniente copper mine are normal Thursday morning following contract workers' protests the previous session, said state-owned copper giant Corporacion Nacional del Cobre (Codelco). El Teniente is the world's largest underground copper mine with annual output of around 400,000 metric tons of copper, or about 24% of Codelco's total annual output.

Copper settlements (ranges include electronic and pit trading):
May $4.1070; down 0.50 cents; Range $4.0960-$4.1185
Jul $4.1110; down 0.40 cents; Range $4.0715-$4.1370