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Copper Increases Most in Two Months in London as Shares Advance
By Chanyaporn Chanjaroen
Nov. 14 (Bloomberg) -- Copper gained the most in almost two months in London as a share rally in the U.S., Asia and Europe suggested investors are more confident in the global economic outlook. Tin rose to the highest since at least 1989.
Copper ended a five-day slide after the Morgan Stanley Capital International World Index advanced. London Metal Exchange contracts have the highest correlation among all commodities to the equity market, according to Deutsche Bank AG.
``Equity markets have been the driver behind the LME move,'' Kevin Tuohy, a trader at MF Global U.K. Ltd., one of 12 companies trading on the exchange's floor, said today by phone. ``Copper is now benefiting from stocks.''
Copper for delivery in three months on the LME advanced $180, or 2.6 percent, to $7,105 a metric ton as of 2:35 p.m. in London. It earlier rose 2.9 percent to $7,126, the biggest intraday gain since Sept. 19.
Tin advanced $320, or 1.9 percent, to $17,220 a metric ton after reaching $17,249 a ton, beating a Nov. 7 high by $24.
Copper has declined for two consecutive weeks and traded at a two-month low on Nov. 12, partly because of concern the U.S. economy may be heading for a recession, reducing demand.
Renewed declines in U.S. equities may hurt LME-traded futures, Tuohy said. ``In terms of copper, the market is not yet convinced where the real support is,'' he said.
Inventories of copper monitored by the exchange climbed 0.4 percent to 178,650 tons, the LME said today in a daily report. They have risen 37 percent since October, paring the decline for the year to 2.3 percent.
Borrowing Charges
The borrowing charge for copper for immediate delivery was at a premium of $2 a ton a day yesterday, after being at parity earlier this week and a discount of $2.50 last week. The shift suggests some reduced availability for buyers in need of the metal.
Sanford C. Bernstein Ltd. raised its 2008 copper price forecast 25 percent to $6,600 a ton for the immediate-delivery contract, Andrew Keen, an analyst at the company in London, said in a report today. The analyst also revised down the size of the surplus expected next year to 211,000 tons, from the 240,000 tons previously forecast.
Among other metals traded on the LME, aluminum advanced $36 to $2,613 a ton and lead added $52 to $3,535. Nickel rose $450 to $33,900 and Zinc was $53 higher at $2,693.