Copper Gains...

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    Copper Prices Cap Fifth-Straight Monthly Gain as Dollar Weakens

    By Millie Munshi and Anna Stablum

    May 29 (Bloomberg) -- Copper advanced in London and New York, capping a fifth-straight monthly gain, as an improving economic outlook and a weaker dollar spurred demand.

    Copper has surged 56 percent this year on rising manufacturing and consumer sentiment, signals of economic stabilization. The six-currency U.S. Dollar Index slid to a five-month low, boosting commodities as a hedge against inflation. The Reuters/Jefferies CRB Index of 19 futures climbed toward a 12 percent May gain, the biggest since July 1974.

    Investors are eager to jump back into the market on signs of bullishness for commodities and the economy, said Michael Gross, a trader at OptionSellers.com in Tampa, Florida. The dollars rapid collapse is really adding fuel to the fire.

    Copper futures for July delivery rose 6.05 cents, or 2.8 percent, to $2.1975 a pound on the New York Mercantile Exchanges Comex division. That leaves the metal up 7.3 percent in May. Five months of gains marks the longest rally since January 2006.

    Japans industrial output rose 5.2 percent in April, the most in 56 years, the Trade Ministry reported. Confidence among U.S. consumers rose this month to the highest since September, according to a Reuters/University of Michigan index. Indias economy, Asias third-biggest, grew 5.8 percent in the first quarter, the government reported.

    Positive Signs

    Recent positive economic data from Asia as well as the current weakness of the U.S. dollar are supporting prices, said Eugen Weinberg, a senior commodity analyst at Commerzbank AG in Frankfurt. Stronger economic data imply better demand for commodities, especially cyclical ones like base metals.

    The dollar weakened as growing evidence that the global recession is easing sent investors in search of assets with higher returns. The U.S. Dollar Index, a gauge of the greenback against six major currencies, slid as much as 1.6 percent, heading for a 6.1 percent drop in May. The index lost 1 percent last month and 2.9 percent in March.

    There is the threat of inflation right now and that means people just want to have hard assets, said Pete Sorrentino, who helps manage $13.8 billion at Hunting Asset Management in Cincinnati.

    Copper for delivery in three months added $80, or 1.7 percent, to $4,830 a metric ton ($2.19 a pound) on the London Metal Exchange.

    Recent data signals stabilization, but I dont think it will be enough to support these prices, Commerzbanks Weinberg said. Prices seem to be well ahead of the fundamentals.

    The U.S. economy shrank at a 5.7 percent annual pace in the first quarter, the Commerce Department said today. That caps the worst six-month performance in 51 years, government data show.

    Among other LME metals for three-month delivery, aluminum rose 1.8 percent to $1,440 a ton. Nickel climbed 3.3 percent to $13,945 a ton. Tin jumped 4.8 percent to $14,300 a ton. Lead surged 6.2 percent to $1,570 a ton and zinc rose 6.2 percent to $1,567 a ton.

    To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net; Anna Stablum in London at astablum@bloomberg.net

    Last Updated: May 29, 2009 15:08 EDT

    http://www.bloomberg.com/apps/news?pid=newsarchive&;sid=aAk3E1yslcEg

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    There is a continuous decrease in LME inventories, also.

    http://www.kitcometals.com/charts/copper_historical.html

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