By Anna Stablum April 9 (Bloomberg) -- Copper rose in London, heading for a third weekly gain, on a weaker dollar and speculation that reviving economies will feed demand. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell for the first time in four days, sliding as much as 0.4 percent. A weaker dollar makes metals priced in the currency cheaper in terms of other monies. Demand for copper in China, the world’s biggest consumer, will rise as much as 10 percent this year, producer Xstrata Plc said. “Strengthening Chinese, U.S. and European activity is convincing investors that supply and demand fundamentals are set to tighten,” Bart Melek, a commodity strategist at BMO Capital Markets, said in a report dated yesterday. Copper for delivery in three months rose $88, or 1.1 percent, to $7,980 a metric ton at 9:53 a.m. on the London Metal Exchange. The contract has gained 1.2 percent this week and reached a 20-month high of $8,010 on April 6. May-delivery copper added 0.9 percent to $3.62 a pound on the Comex in New York. Chinese demand will drive growth in the global copper market, which is set to expand between 2 percent and 3 percent this year, Charlie Sartain, head of Xstrata’s copper unit, said yesterday in an interview. The company is the world’s fourth- largest producer of the metal. U.S. Shoppers In the U.S., the second-largest copper user, consumers are playing a more active role in the economic recovery, according to Bloomberg surveys. Household purchases probably climbed at a 3 percent annual pace in the first quarter of the year, the best performance since 2007, according to the median estimate of 57 economists in a survey. LME copper has gained 8.1 percent this year, less than its 48 percent jump at the same date in 2009, as a stronger dollar held back prices. The euro has slumped 6.5 percent against the U.S. currency in 2010 on concern about Greek’s ability to reduce its budget deficit and the possibility that the country may default on its debt. “The market at the moment is dominated by exogenous events, including what is happening in Greece,” Daniel Major, an analyst at RBS Global Banking & Markets in London, said by phone. The copper market will move into deficit from next year through 2013 after a surplus this year, according to Major. For now, though, with LME-monitored stockpiles up 3 percent over the past year, “conditions aren’t quite there to support it just yet, so we are pretty cautious on the outlook for the next few quarters,” Major said. Inventories tracked by the LME climbed today and bookings to remove metal from warehouses dropped. Stockpiles swelled 0.1 percent to 511,925 tons as bookings, known as canceled warrants, fell 3.2 percent to 16,125 tons. Aluminum for three-month delivery on the LME climbed 1.1 percent to $2,384 a ton after reaching $2,386, the highest intraday price since Jan. 7. Nickel rose 1.9 percent to $25,200 a ton and zinc advanced 1.7 percent to $2,420 a ton. Lead rose 1.6 percent to $2,326 a ton and tin gained 0.6 percent to $18,715 a ton. To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net.

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