Copper declined from a 27-month high as the dollar rebounded, damping demand for commodities as alternative investments and as increasing prices discouraged purchases by Chinese consumers. The metal for three-month delivery was little changed at $8,430.25 a metric ton at 3:01 p.m. in Singapore, after rising as much as 0.6 percent to $8,492 a ton earlier, the highest level since July 2008. Copper for January delivery in Shanghai gained as much as 2 percent to 64,270 yuan ($9,669) a ton, also the highest since July 2008, before paring the advance. “The macroeconomic conditions are having a big influence on metals prices,” said Fu Bin, an analyst at Jinrui Futures Co. “The prospect of further easing in the U.S. is driving the dollar’s direction and outlook for metals prices.” A second round of quantitative easing by the Fed will prolong the bull market in commodities, UBS AG said in a note. A U.S. housing report today is expected to show builders broke ground on 580,000 homes at an annual rate in September, down 3 percent from August. This would be the first drop since June and back the case for the U.S. central bank to expand measures to protect the economic recovery. Copper, used in construction and household appliances, has advanced 9.4 percent in the past month as the dollar slumped 4.9 percent against a basket of six major currencies on expectations U.S. policy makers will cut borrowing costs to zero by January. The dollar rose for a third day against the euro following a slide in Asian stocks. Chinese Demand “Demand in China is good but not great and consumers are buying hand-to-mouth at these price levels,” said Fu. “The short-term fundamental picture isn’t supportive of such high prices and we expect to see a correction soon.” Copper stockpiles tallied by the Shanghai Futures Exchange gained for a second week to 103,510 tons, according to data provided by the bourse. That’s the highest level since the week ended Sept. 3. Immediate-delivery copper in Changjiang, Shanghai’s biggest cash market, dropped for a second day yesterday from a 27-month high of 62,900 yuan on Oct. 14. Quantitative easing and macro drivers “buoyed copper’s price to current highs,” UBS analysts led by Julien Garran said yesterday. “China is short copper, but as China’s industry is highly price sensitive, upside from here is limited.” UBS expected copper to average $3.38 a pound ($7,453 a ton) this year and $3.68 a pound in 2011, up 7 percent each from previous estimates. HSBC Holdings Plc yesterday also raised its 2011 copper target by 16 percent to $3.26 a pound. Aluminum and zinc in London were little changed at $2,410 a ton and $2,426.50 a ton, while lead gained 0.6 percent to $2,453 ton. Nickel increased 0.7 percent to $23,970 a ton, while tin was unchanged at $26,650 a ton by 3:04 p.m. in Singapore. To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@Bloomberg.net

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