copper gains for fourth session

Copper Gains for Fourth Session as U.S. Growth Concerns Ease

By Millie Munshi

Sept. 20 (Bloomberg) -- Copper gained for a fourth straight session as lower borrowing costs and a report showing improved employment eased concerns the economy will slow in the U.S., the world's second-largest consumer of the metal.

The Federal Reserve cut its benchmark lending rate Sept. 18 to stabilize growth. The number of U.S. workers filing claims for jobless benefits unexpectedly fell last week, a government report showed today. Copper has fallen 11 percent from a record in May 2006 as a U.S. housing slump curbed demand.

``People are starting to feel a lot more comfortable that the economy is going to keep moving along at a healthy clip,'' said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. ``Demand is going to stay strong for metals.''

Copper futures for December delivery gained 1.9 cents, or 0.5 percent, to $3.5945 a pound on the Comex division of the New York Mercantile Exchange. The metal, which rose to a record $4.04 in May 2006, has gained 6 percent this week.

``Copper prices may rise strongly as the overall sentiment in the markets remains supportive,'' Sahil Kapoor, an analyst at Kotak Commodity Services Ltd. in Mumbai, wrote in a report.

Barclays Capital yesterday boosted its 2008 copper forecast by 30 percent partly because of increasing confidence in economic growth. The metal will average $7,800 a metric ton next year ($3.54 a pound), the bank said.

``We view copper prices as having the potential to stage a very big move up should current concerns over the state of the global economy recede,'' Barclays' analysts including Gayle Berry in London wrote in the report.

Rate Cut

The Fed lowered its benchmark interest rate by half a percentage point to 4.75 percent, the first cut in four years, spurring confidence in the U.S. economy, traders said.

Initial jobless claims decreased by 9,000 to 311,000 in the week that ended Sept. 15, the Labor Department said. Economists had forecast claims would rise to 321,000, according to the median estimate of 42 economists in a Bloomberg survey.

The metal may also be supported as a strike in Peru raises supply concerns, traders said. Southern Copper Corp.'s Toquepala mineworkers in Peru voted to strike Oct. 2 for higher wages, a union official said today. Labor unrest has reduced production in Chile, Peru and Mexico this year.

A weaker dollar is spurring investor demand as commodities traded in dollars become cheaper for foreign buyers, Dennis Gartman, an economist and editor of the Suffolk, Virginia-based Gartman Letter, said today. The dollar fell to a record low against the euro today.

On the London Metal Exchange, copper for delivery in three months rose $5 to $7,890 a metric ton. The metal has gained 25 percent this year.

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