Copper Advances on Speculation U.S. Economy Will Bolster Demand

May 27 (Bloomberg) -- Copper rose to the highest price in almost two weeks on speculation that an improving economy in the U.S. will bolster demand.

The recovery in the U.S. and globally is "on track," Federal Reserve Bank of St. Louis President James Bullard said today. Purchases of new U.S. homes jumped last month and orders for durable goods climbed, government data showed yesterday. Before today, copper dropped 8 percent this year, partly because of the debt crisis in Europe.

"Copper is moving on the overall sentiment that prevails on any given day," said Donald Selkin, the chief market strategist at National Securities Corp. in New York. "Today, we've had some positive statements, and so, for the short term, people are feeling good again."

Copper futures for July delivery rose 7.8 cents, or 2.5 percent, to $3.1585 a pound on the Comex in New York. In electronic trading after the settlement, the price reached $3.1685, the highest level since May 14.

The metal headed for a second straight monthly drop amid signs that China will restrain its surging economy and lingering concern that Greece may default on borrowings.

"Until the European mess clears up, we're going to see prices" moving within ranges, said Randy North, a trader at RBC Capital Markets in London.

Copper rose today as the dollar fell and equity markets gained, Selkin of National Securities said. The greenback dropped as much as 1.2 percent against a basket of currencies, boosting the appeal of commodities as alternative assets.

Inventories of copper monitored by the London Metal Exchange headed for a third straight monthly drop.

"The fundamental backdrop remains supportive for base metals, with macroeconomic data surprising to the upside and inventories at the LME declining," Stefan Graber, an analyst at Credit Suisse Group in Singapore, said in a report.

Copper for delivery in three months rose 3 percent to $6,984 a metric ton ($3.17 a pound) in London. Zinc, nickel, lead, tin and aluminum prices also gained.