By Anna Stablum March 16 (Bloomberg) -- Copper gained in New York and London as a weaker dollar spurred demand for commodities denominated in the currency and inventories monitored by the London Metal Exchange shrank. The U.S. Dollar Index, a six-currency gauge of the greenback’s value, declined as much as 0.4 percent today before a U.S. Federal Reserve meeting on interest rates. A weaker U.S. currency makes dollar-priced metals cheaper for those holding other monies. Copper stockpiles in warehouses monitored by the LME fell to the lowest level in eight weeks. “With the market waiting for the FOMC tonight, we don’t expect any major fireworks,” said Randy North, a trader at RBC Capital Markets in London. Prices will be “heavily influenced” by the dollar, he said. Copper for May delivery gained 2.65 cents, or 0.8 percent, to $3.342 a pound at 8:09 a.m. on the Comex in New York. Copper for delivery in three months rose 1 percent to $7,380.25 a metric ton on the LME. Comex copper fell as much as 2.7 percent to $3.29 a pound yesterday, matching a low on March 2, as the dollar rose and on concern that demand from China, the world’s largest consumer, may weaken because of steps aimed at cooling economic growth. The dollar weakened before the Fed’s decision on interest rates at 2:15 p.m. in Washington today. All 90 economists surveyed by Bloomberg News forecast the Fed will keep the benchmark interest rate at a record-low range of zero to 0.25 percent. Since March 2009, the policy makers have said “exceptionally low” rates are likely warranted for “an extended period.” Total Stockpiles Drop Stockpiles of copper in LME-monitored warehouses fell for a 10th day to the lowest since Jan. 20. Aluminum for three-month delivery on the LME gained 0.8 percent to $2,244 a ton and zinc rose 0.9 percent to $2,301 a ton. In China, aluminum and zinc stockpiles have increased to more than double the amount stored in warehouses monitored by the Shanghai Futures Exchange, according to CBI China Co. Nickel rose 1.7 percent to $21,870 a ton, advancing this year’s gain to 18 percent, the best performer among the main LME-traded metals. Vale SA, the world’s second-biggest nickel producer, will produce the first output of the metal from the $4.3 billion Goro mine in New Caledonia by the end of this month or the start of the next after a three-month delay. Lead advanced 0.7 percent to $2,220 a ton and tin gained 1.2 percent to $17,660 a ton. To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net.

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