SF: Copper Declines as Dollar Strengthens, Investors Book Profits
June 16 (Bloomberg) -- Copper fell in London with investors booking profits after prices rose to a two-week high and the dollar strengthened, reducing the appeal of metals as an alternative investment.
The U.S. Dollar Index, a six-currency gauge of the greenback's strength, added as much as 0.4 percent. A stronger dollar makes metals priced in the U.S. currency more expensive in terms of other monies. Three-month copper on the London Metal Exchange rose as much as 1.4 percent to $6,775 a metric ton before paring gains. The contract had risen for six consecutive days, gaining 9.5 percent.
"The high correlation to the dollar/euro means that the LME will follow it like a dutiful labrador," said Alex Heath, head of industrial-metals trading at RBC Capital Markets in London. "There is also a bit of profit-taking," he said.
Copper for delivery in three months dropped $36.75, or 0.6 percent, to $6,643.25 a metric ton by 12:33 p.m. on the LME. The contract earlier rose to the highest since June 2. Futures for September delivery fell 0.5 to $3.0095 a pound on the Comex in New York.
Prices rose earlier on speculation reports will signal that the economy remains robust in the U.S., the world's second- biggest consumer of the metal. U.S. industrial production climbed the most in four months, according to economists surveyed by Bloomberg News. Manufacturing, employment and other leading-indicator data in the U.S. and Europe remain in "expansionary territory," JPMorgan Cazenove said.
"The U.S. industrial-production data could surprise on the upside," said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt.
Output at U.S. factories, mines and utilities increased 0.9 percent in May, the most since January, according to the survey. The figures are due at 2:15 p.m. London time.
Nickel for three-month delivery on the LME fell 1.7 percent to $19,885 a ton and aluminum eased 0.6 percent to $2,001 a ton. Zinc slipped 1.2 percent to $1,817.50 a ton, lead fell 1.2 percent to $1,738 and tin was unchanged at $17,500 a ton.
--With assistance from Jason Scott in Perth and Timothy R. Homan in Washington. Editors: Tony Barrett
