Copper Gains, Erasing Loss, as U.S. Service Industries Expand By...

Copper Gains, Erasing Loss, as U.S. Service Industries Expand

By Millie Munshi

Sept. 6 (Bloomberg) -- Copper futures gained, erasing an earlier loss, after a report showed expansion in U.S. service industries was higher than forecast.

Copper, which sometimes moves in line with economic growth, has fluctuated between gains and losses today as traders followed various reports on the U.S. economy. The metal dropped 6.2 percent in the past month before today on speculation that losses from subprime mortgages would slow U.S. expansion.

Economic reports today have been `` mixed,'' said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. ``Trading is going to stay fairly volatile.''

Copper futures for delivery in December gained 3.9 cents, or 1.2 percent, to $3.302 a pound at 12 p.m. on the Comex division of the New York Mercantile Exchange. Before today, the metal had gained 14 percent in 2007.

The Institute for Supply Management's index of non- manufacturing businesses, including builders and retailers, held at 55.8, the group said today. Economists expected the gauge to fall to 54.5, according to the median of 76 forecasts in a Bloomberg survey. A reading above 50 points to growth.

``Growth concerns will once again dominate sentiment'' in the copper market, Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said in a report. Trading will remain ``nervous and volatile,'' he said.

Earlier, the metal fell as much as 1 percent after a report today showed U.S. home foreclosures rose to a record, renewing concern that a housing slump will slow the economy.

The share of all U.S. mortgages entering foreclosure rose to 0.65 percent in the second quarter from 0.58 percent in the first three months of 2007, the Mortgage Bankers Association said.

``People are trying to take a pulse of the economy,'' said Eric Wittenauer, an industrial-metals analyst at A.G. Edwards & Sons Inc. in St. Louis.

On the London Metal Exchange, copper for delivery in three months gained $140, or 2 percent, to $7,300 a metric ton ($3.31 a pound). The metal rose to a record $8,800 a ton in May 2006.

To contact the reporter on the story: Millie Munshi in New York at [email protected] .

Last Updated: September 6, 2007 12:12 EDT