Copper Extends Gains in Asia as Recent Decline Lures Buyers

LONDON, June 24 -- Copper gained for a second day in Asia, after the metal's drop to the lowest in more than three weeks and the dollar's decline sparked buying interest.

    The metal used in electrical wiring and plumbing fell to $4,685 a metric ton yesterday, the lowest since May 28, after the World Bank said the global recession will deepen more than earlier forecast. Copper is up 57 percent this year on speculation of demand revival as the economy recovers.

    "The steep fall at the beginning of the week managed to attract some investors back into the market," Chen Yonglin, an analyst at CITIC Newedge Futures Co., said from Shanghai today. "The weaker U.S. dollar also helped support the market."

    Three-month delivery copper on the London Metal Exchange rose as much as 1.3 to $4,869 a ton, and traded at $4,854 at 11:51 a.m. Singapore time. Copper for September delivery in New York lost as much as 1.7 percent to $2.1740 a pound.

    October-delivery copper on the Shanghai Futures Exchange gained as much as 1.9 percent to 38,890 yuan ($5,691) a ton, before trading at 38,800 yuan at the 11:30 a.m. local time break.

    The dollar traded near a three-week low against the yen and fell the most in six weeks against the euro yesterday on speculation the Federal Reserve will signal today it intends to refrain from raising interest rates this year.

    "We are positive towards copper and see prices trading in a $4,000-to-$6,000 a ton range during the remainder of this year," said Robin Bhar, an analyst at Credit Agricole SA's Calyon unit. "Investors buy copper as a hedge against a falling U.S. dollar and rising inflation expectations, as well as to gain exposure to strengthening global growth and exposure to China."

    Among other LME-traded metals, aluminum gained 0.5 percent to $1,613 and nickel added $14,700 a ton. Zinc rose 1.4 percent to $1,540 a ton and lead added 1.1 percent to $1,636 a ton, while tin hadn't traded as of 12:05 p.m. in Singapore.

    (Source: Bloomberg)