BASE METALS: Renewed Risk Appetite Lifts Comex Copper

Aug 12, 2011 (Dow Jones) -- --Comex September copper up 2.25 cents, or 0.6%, at $4.0310/lb

--Copper prices follow equities higher

--Weak dollar buoys dollar-denominated copper futures

By Tatyana Shumsky
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Copper inched higher as a weaker dollar and optimism about the wider financial markets buoyed prices.

The most actively traded contract, for September delivery, was recently up 2.25 cents, or 0.6%, at $4.0310 a pound on the Comex division of the New York Mercantile Exchange.

Thinly traded August-delivery copper was up 1 cent, or 0.3%, at $4.0145 a pound after just one contract changed hands.

Copper futures followed equities higher as risk appetite returned to the broader markets. The Dow Jones Industrial Average climbed about 87 points to 11230 in recent trade.

Copper futures, like equities, are considered a risky investment where investors may see greater returns than those offered by U.S. Treasurys, but they run the risk of greater losses.

Copper prices are highly sensitive to economic growth as the industrial metal is widely used in manufacturing goods like cars, phones and laptops. Demand for such products tends to improve when economic activity expands.

A weaker dollar also gave copper futures a boost. Dollar denominated contracts like Comex futures appear cheaper to investors using foreign currencies when the dollar eases.

The ICE Dollar Index, which tracks the greenback against a basket of international currencies, was recently at 74.549, down from 74.63 late Thursday in New York.

"With the dollar down, it may keep some sellers out of the market," said Sterling Smith, analyst with Country Hedging.