Copper advanced for a third day as demand for the industrial metal reduced inventories to a seven- month low and a gain in equities spurred confidence in the global economic recovery. Three-month delivery copper added 0.5 percent to $6,504 a metric ton on the London Metal Exchange at 1:05 p.m. in Shanghai. Stockpiles tracked by the LME fell to 444,500 tons yesterday, the lowest level since Dec. 2. Bookings to remove copper from LME warehouses slid 4.8 percent to 33,325 tons after touching the highest level in almost four months on July 1. “Declining stockpiles have lent support to the market that fell 5.3 percent last week,” said Hwang Il Doo, a senior trader at KEB Futures Co. in Seoul. Copper for September delivery added 1 percent to $2.9445 a pound on the Comex in New York. The U.S. market was closed yesterday for the Independence Day holiday. Asian stocks rose, driving up the MSCI Asia Pacific Index by the most in two weeks, as investors bet equities had become cheap relative to earnings prospects. Copper was also supported by a drop in the dollar, with the Dollar Index, which gauges the currency against six major trading partners, losing as much as 0.2 percent to 84.411. Copper, used in pipes, tubes and wires, lost 16.4 percent in the second quarter, the first drop since 2008, on concern an economic recovery would slow in the second half. Manufacturing growth weakened last month in China, Europe and the U.S., which account for as much as two-thirds of global demand. Supply Concerns The world’s biggest copper producers are warning of looming supply limits at the same time that growing concerns about the global economy leave investors with the largest losses in nine years, according to a survey. “If the pace of the global economic recovery slows, investors will reduce their expectations for consumption of the metal and prices may fall further,” said Li Qiang at Xinhu Futures Co. in a report today. While LME futures anticipate prices no higher than $6,519.50 a ton through the end of 2011, 13 of 14 analysts surveyed by Bloomberg expect a shortage next year. Traders are being too bearish because lower prices may curb spending on mines and exacerbate future shortages, said Goldman Sachs Group Inc., which forecasts a price of $8,050 in 12 months. The metal for October delivery fell 0.5 percent at 52,000 yuan ($7,674) a ton on the Shanghai Futures Exchange at 1:32 p.m. local time. Shanghai aluminum was little changed at 14,910 yuan, while zinc advanced 0.3 percent to 15,275 yuan. Aluminum for three-month delivery in London rose 0.4 percent to $1,944.25 a ton, zinc gained 1.1 percent to $1,826 and lead rallied 0.6 percent to $1,775 a ton. Nickel advanced 0.7 percent to $18,801 a ton and tin climbed 0.6 percent to $17,430. To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net

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