By Anna Stablum July 2 (Bloomberg) -- Copper rebounded in London on speculation this week’s drop was excessive and as the dollar weakened before a U.S. payrolls report forecast to show employment fell last month for the first time this year. “Other payroll numbers have not been good and they have been behind some of the disappointment earlier this week,” Charles Kernot, an analyst at Evolution Securities Ltd. in London, said by phone. Prices gained as investors added short- positions, bets on falling prices, after prices were “battered about over the earlier stage of the week,” Kernot said. Copper for delivery in three months rose $180, or 2.8 percent, to $6,510 a metric ton at 9:28 a.m. on the London Metal Exchange. The contract fell to $6,318 yesterday, the lowest intraday price since June 18. Futures for September delivery gained 2.4 percent to $2.947 a pound on the Comex in New York. LME copper dropped 3.8 percent this week as manufacturing in China and the U.S., the world’s largest metals consumers, expanded at a slower pace in June, data showed this week. ‘Dampen Things Down’ Figures from ADP Employer Services on June 30 showed that U.S. companies expanded payrolls by 13,000, the smallest gain since February. The reports added to concern that a Chinese slowdown combined with austerity measures in Europe may undermine the global recovery. Moody’s Investors Service said two days ago it may cut Spain’s top credit rating. The austerity measures introduced might “affect final consumer demand,” Kernot said. “That could dampen things down and unfortunately, not just for the second half of this year, but in 2011 as well.” Nine of 17 analysts, investors and traders surveyed by Bloomberg, or 53 percent, said the metal will decline next week. Seven predicted higher prices and one forecast little change. The U.S. payrolls report, due at 1:30 p.m. London time, will be followed at 3 p.m. by a report showing U.S. factory orders fell 0.5 percent in May after a rise of 1.2 percent in the previous month. “The U.S. economy really remains in a very difficult state and that is despite the fact that huge amounts of money have been pumped into the U.S. system,” Kernot said. Stockpiles Fall Copper has dropped 12 percent this year as the dollar index gained 9 percent and investors speculated that monetary tightening in China and the European sovereign-debt crisis may curb demand. Stockpiles of copper tracked by the LME declined for an 11th day to 447,300 tons, the lowest level since Dec. 4. Bookings to remove metal from warehouses eased 1.2 percent to 35,000 tons. Copper stockpiles monitored by the Shanghai Futures Exchange gained 619 tons to 124,558 tons this week, the exchange said in a statement on its website today. Aluminum for three-month delivery on the LME advanced 1.8 percent to $1,960.50 a ton. Lead rose 2.3 percent to $1,775 a ton, nickel gained 2 percent to $19,388 a ton and zinc climbed 4.5 percent to $1,818 a ton. Tin rose 1.7 percent at $17,250 a ton. --With assistance from Li Xiaowei in Shanghai and Bob Willis in Washington. Editors: John Deane, Alastair Reed. To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net. To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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