Jul 19, 2011 (Dow Jones Commodities News via Comtex) -- --U.S. housing starts rise 14.6% in June
--Chinese metals demand seen as steady despite monetary tightening
--Weaker dollar supports commodities
By Matt Day
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--An upbeat reading on the U.S. housing sector and declines in the dollar pushed copper futures to their highest levels in three months Tuesday.
The most actively traded contract, for September delivery, settled up 6.5 cents, or 1.5%, at $4.468 a pound on the Comex division of the New York Mercantile Exchange, the highest settlement price since April 8.
The U.S. housing sector, long a drag on the economy of the world's second-largest copper consumer, showed signs of life in June. U.S. home construction during the month climbed to its highest level in five months, the Commerce Department said Tuesday, showing a 14.6% increase from the May levels. Newly issued building permits, a measure of future building, rose 2.5% on the month, to the highest rate since December.
Copper is sensitive to the construction outlook, as it is widely used in electrical wiring, plumbing and appliances. While the report doesn't point to a full-fledged recovery in the beleaguered U.S. construction sector, it may suggest that U.S. housing has bottomed out and is on the road to recovery, analysts with Nomura said in a note.
Copper futures had spent much of the last two weeks trading in a narrow range near $4.40 a pound, with worries about U.S. and European debt capping its gains. The market has drawn support from the view that Chinese demand will continue at a steady pace despite efforts by the country's government to limit credit and to keep its growing economy from overheating.
"With Chinese growth still chugging along nicely, in spite of tighter monetary conditions, it may be that copper is now also being seen in the same light as gold, and is also benefiting from the wider uncertainty in the global markets and investor interest in hard assets," Standard Bank analyst Leon Westgate said in a note.
A weaker dollar added fuel to copper's rally Tuesday. The ICE U.S. Dollar Index, which tracks the currency against those of some major U.S. trading partners, was at 75.082 at the close of Comex floor trading, down from 75.357 late Monday in New York.
Declines in the currency can boost dollar-denominated commodities such as copper, as it makes the futures cheaper for buyers using other currencies.
Copper settlements (ranges include electronic and pit trading):
July $4.4605; up 6.45 cents; Range $4.4085-$4.4870
Sept $4.4680; up 6.50 cents; Range $4.4045-$4.4960