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Copper hits 8-month high.

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Chris Kelly and Michael Taylor

New York, London — Reuters, Tuesday, Jun. 09, 2009 04:19PM EDT

Renewed dollar pressure and growing hopes for recovery in the global economy helped drive the price of copper to an eight-month high on Tuesday, while aluminum hit a six-month peak on signs of stronger demand.

Copper for July delivery on the New York Mercantile Exchange's Comex division rallied 11.25 cents (U.S.), or 5 per cent, to close at $2.3655 a pound, after trading between $2.26 and $2.3690, which marked the highest level for the benchmark contract since mid-October.

On the London Metal Exchange, copper for three-months delivery settled up $190 at $5,170 a tonne, after hitting a session high of $5,199.50, its highest level since Oct. 15.

Matthew Zeman, head of trading at LaSalle Futures Group in Chicago, said renewed downward pressure on the U.S. dollar set the tone for a generally up day across the commodity complex.

“All the commodities are moving together, and they are all moving very strong off of this dollar weakness. I'd look for it to continue for the time being,” Mr. Zeman said.

A weaker dollar typically makes metals priced in the U.S. currency cheaper for holders of other currencies.

The Reuters-Jefferies CRB index, a global commodities benchmark, firmed 1.68 per cent to a session high at 260.22 in late afternoon business.

Recent improvement in economic data has helped copper, used in power and construction, gain nearly 7 per cent this month.

Data last week showed U.S. manufacturing shrank at a slower-than-expected rate in May, while in China, the world's third-biggest economy, industrial activity expanded in the month.

“We are seeing more and more signs of life,” Rob Kurzatkowski, a futures analyst with OptionsXpress in Chicago, said, citing last week's stronger-than-expected Chinese industrial production and Tuesday's 47 per cent jump in China's passenger car sales in May.

“The industrial sector in China, for all practical purposes, is seen as making a sharp V-shaped recovery,” he said.

Copper is 65 per cent higher year-to-date, largely spurred by Chinese stockpiling, but analysts warn this supportive buying from the world's biggest consumer appears to be waning.

Falling stocks of copper in LME warehouses also helped boost confidence. Inventories fell 1,500 tonnes to 296,350 tonnes.