By Anna Stablum Sept. 16 (Bloomberg) -- Copper rose in New York and London before the release of figures that probably will show demand in the U.S., the world’s second-largest user of the metal, is strong enough to prevent deflation. Prices paid to factories, farmers and other producers gained for a second month in August, climbing 0.3 percent, according to the median forecast in a Bloomberg News survey of 76 economists. Copper erased a drop after sliding as equities fell the most in three weeks in China, the biggest consumer, on speculation that the government might curb bank lending. “Copper has suffered at the hands of weaker Asian equity markets overnight, but should pick up in London as economic data likely shows an improvement on recent weakness,” said David Thurtell, a Citigroup Inc. analyst in London. Copper for delivery in December added 2.05 cents, or 0.6 percent, to $3.487 a pound at 7:04 a.m. on the Comex in New York. Copper for delivery in three months gained 0.7 percent to $7,670 a metric ton on the London Metal Exchange. The Labor Department’s wholesale-costs figures are due out at 8:30 a.m. in Washington. Ninety minutes later, the Federal Reserve Bank of Philadelphia may report manufacturing barely expanded in the area covering eastern Pennsylvania, southern New Jersey and Delaware. ‘A Shocker’ LME copper slid as much as 1.5 percent on Aug. 19, when the Philadelphia Fed’s general economic index unexpectedly dropped to minus 7.7. Economists had predicted a gain. Today’s figures may show a climb to 0.5 in September, according to a Bloomberg survey of economists. “The Philly Fed last month was a shocker, and I expect it to be better today,” Citigroup’s Thurtell said. Figures released in recent weeks also showed weaker-than- expected U.S. housing starts and durable-goods orders in July. Copper rebounded today as the U.S. Dollar Index, a six- currency gauge of the greenback’s strength, fell as much as 0.5 percent. A weaker dollar makes metals priced in the currency cheaper in terms of other monies. LME copper stockpiles fell for a second day to 387,150 tons, the lowest level since Nov. 6, according to daily exchange figures. Orders to draw copper from inventories, or canceled warrants, rose for a third day, gaining 13 percent to 31,225 tons, the highest level since Aug. 20. Canceled warrants have surged 51 percent in three days. Tin Advances Tin for three-month delivery on the LME rose 0.7 percent to $23,320 a ton after touching $23,410, the highest intraday price since July 23, 2008. The metal is this year’s best performer in London, gaining 38 percent, compared with the 26 percent advance by closest rival nickel. Tin climbed to a record $25,500 a ton on May 15, 2008. LME stockpiles, down 49 percent this year, today rose 0.4 percent to 13,580 tons, according to figures from the exchange. One party held between 40 percent and 49 percent of the inventory as of Sept. 13, according to the LME. “The general ban on mining in the tin-rich eastern provinces of Congo, Africa’s largest tin producer,” is aiding prices, Eugen Weinberg, an analyst at Commerzbank AG, said in a report yesterday. Democratic Republic of Congo President Joseph Kabila suspended all mining operations in three eastern provinces, the mines ministry said on Sept. 11. Tin also advanced this year on prospects for a drop of about 20 percent in output from Indonesia, the biggest exporter, as adverse weather disrupts mining. Nickel rose 0.2 percent to $23,250 a ton after yesterday reaching $23,358, the highest intraday price since May 10. The market moved into a so-called backwardation for the first time in more than a year on Sept. 14 as immediate-delivery nickel traded at a premium to three-month metal. Cash nickel traded at a premium of $5 a ton to the three- month contract yesterday, widening from $2 in the prior session, according to the latest LME figures. Cash metal was at a discount of $6 on Sept. 13. Aluminum gained 0.2 percent to $2,157.75 a ton, lead dropped 0.6 percent to $2,225 a ton and zinc advanced 0.4 percent to $2,154 a ton. To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net.

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