Copper rose to seven-month highs in London and New York as the dollar weakened and manufacturing increased in China, the biggest user of the metal. China’s official Purchasing Managers’ Index was 53.1 in May, the third straight reading of more than 50, which indicates expansion, the Federation of Logistics and Purchasing said today in Beijing. The U.S. Dollar Index dropped as much as 1 percent to its lowest level this year, boosting the appeal of commodities as a hedge against inflation. “People are really pouring into copper and the commodities overall right now on the dollar weakness and the thinking that there is an end in sight for the recession,” said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. “A lot of these commodities can go a lot higher from here.” Copper futures for July delivery jumped 11.65 cents, or 5.3 percent, to $2.314 a pound at 11:29 a.m. on the New York Mercantile Exchange’s Comex division. A close at that price would be the biggest one-day gain since April 3. Earlier, the metal touched $2.315, the highest for a most-active contract since Oct. 15. “The Chinese data, on the surface, indicate the stimulus package, which includes fiscal and bank lending, has an effect in stimulating the economy,” said James Parsons, a portfolio manager at London-based BlueCrest Capital Ltd., which manages about $12 billion. “The question is, how sustainable that is.” China Development By the end of April, 20,000 kilometers (12,430 miles) of secondary roads, 445 kilometers of highways, 214,000 homes and 100,000 square meters (1.08 million square feet) of airport buildings had been built in China as part of a 4 trillion-yuan ($586 billion) economic-stimulus plan, the National Development and Reform Commission said on May 21. Further dollar weakness and more signs of an economic recovery in China will buoy metals as traders and investors, who had speculated on a price decline, buy long positions to cover those wagers, Leon Westgate, an analyst at Standard Bank Plc in London, said today by telephone. Hedge-fund managers and other large speculators reduced their net-short position, or bets on a price drop, by 5.8 percent in New York copper futures in the week ended May 26, according to U.S. Commodity Futures Trading Commission data. Speculators have been net-short in copper since July, the data show. The S&P GSCI, a basket of 24 commodity futures, climbed as much as 2.4 percent. The Reuters/Jefferies CRB Index of 19 raw materials surged 14 percent in May, the biggest monthly gain since July 1974, on signs of an improving economic outlook. London Prices Copper for delivery in three months added $234.25, or 4.8 percent, to $5,064.25 a metric ton ($2.30 a pound) on the London Metal Exchange, the first time the price has topped $5,000 since Oct. 15. Copper stockpiles monitored by the LME dropped 300 tons, or 0.1 percent, to 311,975 tons today. Inventories at LME- registered warehouses in Europe rose 1,225 tons, the first increase since May 6. Among other metals traded in London, nickel added 4 percent to $14,500 a ton. Tin increased 2.1 percent to $14,600 a ton and lead advanced 4.5 percent to $1,640 a ton. Zinc increased 2.1 percent to $1,600 a ton.

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