Copper gained for the first time in three days in London as a weaker dollar bolstered the appeal of commodities as alternative investments. The dollar slid to a six-week low against the euro after the Federal Reserve yesterday left its benchmark interest-rate target at a record low and pledged to take more steps to spur economic growth if needed. The euro gained as Portugal prepared to sell bonds today after investors bought the maximum amounts offered at Spanish and Irish debt sales yesterday. “The main thing is the weakness of the dollar,” said Dan Smith, an analyst at Standard Chartered Plc in London. “The Fed statement creates additional worries about the U.S., and the European bond sales create positives for Europe.” Copper for delivery in three months added $45, or 0.6 percent, to $7,725 a metric ton at 10:35 a.m. on the London Metal Exchange. Copper for delivery in December climbed 0.9 percent to $3.5115 a pound on the Comex in New York. Raw materials from palladium to rice advanced. Investors bought and sold 1,869 LME copper contracts, less than 5 percent of volume on Sept. 17. Financial markets in China, the world’s biggest copper user, are closed until Sept. 27 for a holiday. The dollar slumped 1.5 percent against the euro after the Fed statement yesterday and today fell to the lowest level since Aug. 6. Some investors buy commodities as an alternative to a weaker greenback, which makes dollar-priced metals cheaper in terms of other monies. ‘Optimistic About Demand’ “Near-term direction will be influenced by economic data, the stock market and the dollar,” Tiger Shi, head of Asia- Pacific metals at Newedge Group, said from Hong Kong. “We are still pretty optimistic about demand going forward.” Shares fell in Europe today, and futures indicated that U.S. equity benchmarks will drop when trading begins in New York. Builders in the U.S. began work on more homes than forecast in August, outpacing the number of building permits issued, figures showed yesterday. Construction accounts for a quarter of copper demand, according to the Copper Development Association. The Federal Housing Finance Agency’s monthly index for house prices, due out today at 3 p.m. London time, fell 0.2 percent in July, according to a Bloomberg survey of economists. That would be less than June’s 0.3 percent drop. Futures on the Chicago Mercantile Exchange show a 70 percent chance the Fed will keep its target rate for overnight bank lending between zero and 0.25 percent through its June 2011 meeting, up from 61 percent odds a day earlier. The U.S. central bank also said yesterday it refrained from expanding its holdings of securities. Fed Statement The Fed said it “will provide additional accommodation if needed” to spur growth and that inflation “is likely to remain subdued for some time.” Investors often buy commodities as a hedge against rising prices. Portugal readied the issue of as much as 1 billion euros ($1.3 billion) of bonds after Ireland sold 1.5 billion euros of debt yesterday and Spain sold 7 billion euros of 12-month and 18-month bills, the maximum target. LME copper stockpiles gained for the first time in six days, rising 0.5 percent to 382,100 tons and rebounding from the lowest level since November, daily exchange figures show. Orders to draw copper from inventories, or canceled warrants, fell 1.6 percent to 28,700 tons. One party held between 30 percent and 39 percent of the stockpiled metal and another held between 40 percent and 49 percent as of Sept. 17. Among other LME-traded metals for three-month delivery, tin was unchanged at $23,000 a ton. The metal is this year’s best LME performer, adding 36 percent, compared with the 21 percent advance by closest rival nickel. Prices have been bolstered by disruptions to production in the Democratic Republic of Congo and Indonesia. Aluminum added 0.6 percent to $2,187 a ton, and zinc gained 0.8 percent to $2,160 a ton. Nickel rose 0.1 percent to $22,375 a ton, and lead was 0.5 percent higher at $2,184.75 a ton. To contact the reporters for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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