Copper Gains as Shrinking Stockpiles Offset Europe Debt Concern

May 31 (Bloomberg) -- Copper climbed in New York, extending last week's gains, after global inventories declined, offsetting concerns that Europe's debt crisis will derail the economic recovery.

Copper for July delivery on the Comex in New York rose as much as 1 percent to $3.135 a pound before trading at $3.1325 at 9:46 a.m. in Singapore. The London Metal Exchange is closed today for the Spring bank holiday. September-delivery copper on the Shanghai Futures Exchange dropped 0.4 percent to 55,560 yuan ($8,134) a metric ton, paring an earlier 1 percent loss.

The metal used in construction and automobiles advanced today after Shanghai copper stockpiles fell for a fourth straight week, dropping by the most in two months. LME-tracked inventories dropped 5.1 percent in May, the third consecutive monthly decline. 

"The fundamental news flow remains fairly positive," said Stefan Graber, an analyst at Credit Suisse Group AG in Singapore. "However, due to lingering deleveraging pressures, we think sentiment is likely to remain shaky for the time being."

Futures in New York have tumbled 6.7 percent this month as the risk of Greece defaulting on its debt roiled markets, prompting the European Union to initiate a close to $1 trillion package of measures to support the region's currency and raising concern that the region's fiscal burden will weigh on growth and damp demand for raw materials.

Copper for three-month delivery on the London Metal Exchange fell for a second straight month in May, dropping by 6.6 percent, the worst performance since January.