May 20 (Bloomberg) -- Copper rose in London on speculation that prices fell too far this month at a time when stockpiles of metal are declining. Inventories of copper tracked by the London Metal Exchange shrank for a third day today and are headed for a third monthly drop in a row. Bookings to remove metal from warehouses gained for a second day, on course for the biggest weekly climb in four weeks. LME copper had dropped 13 percent in May at this month's lowest intraday price on May 17. "We are coming to a level where we should be encountering good buying interest from consumers, so there is a floor reasonably close to hand," said Robin Bhar, an analyst at Credit Agricole CIB in London. "I think we have seen the worst of the selloff." Copper for delivery in three months rose $145, or 2.2 percent, to $6,650 a metric ton at 10:09 a.m. on the LME. The contract pared a gain of as much as 3.3 percent. Futures for July delivery advanced 1.8 percent to $3.012 a pound on the Comex in New York. Prices have slid in recent weeks on concern European efforts to curb government debt may erode economic growth and China might step up measures to tackle asset bubbles. That has weighed on the euro and boosted the dollar. A stronger U.S. currency makes dollar-priced metals more expensive in terms of other monies. 'Realistic' Prices The U.S. Dollar Index, a six-currency gauge of the greenback's strength, swung between gains and losses today. It has advanced 11 percent this year as LME copper has dropped 9.8 percent. "Prices are back down to more realistic levels," Bhar said. "With growth picking up in Europe and the U.S., which hasn't caught the market's attention because it has been occupied with the debt crisis, we are nearing a floor." A report this week showed that U.S. housing starts rose more than estimated by economists in April. U.K. retail sales gained for a third month last month and beat expectations, according to figures released today. "The short-term outlook for base metals and copper in particular remains very much confused," Barclays Capital analysts led by Nicholas Snowdon said in a report yesterday. While fundamentals are "constructive," financial markets have experienced a "period of heightened uncertainty," they said. More Bookings Stockpiles tracked by the LME slipped 0.2 percent to 481,300 tons. Bookings to remove metal jumped 9.1 percent to 23,500 tons, the highest level since May 4, extending this week's climb to 27 percent. The fall in inventories "shows there is demand outside of China," Bhar said. The country is the world's biggest consumer of copper, used in electrical gear and construction. Aluminum for three-month delivery on the LME rose 0.6 percent to $2,014 a ton. Immediate-delivery metal's discount to the three-month price, the so-called contango, was at $31.50 a ton, little changed from $31.75 in the previous session. It reached $22 on May 14, the lowest since July. Lead gained 1.3 percent to $1,779 a ton and zinc rose 1.5 percent to $1,885 a ton. Tin declined 0.5 percent to $17,360 a ton and nickel rose 2.1 percent to $21,750 a ton. --With assistance by Li Xiaowei in Shanghai. Editors: Dan Weeks, John Deane.

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