Copper Gains After Federal Reserve Gives No Rate-Rise Signal

By Glenys Sim

June 26 (Bloomberg) -- Copper rose for the first time in four days in Asia as the dollar fell after the Federal Reserve gave no indication that it will increase interest rates, raising the investment appeal of raw materials.

The Fed kept its benchmark rate at 2 percent yesterday and said risks to growth have diminished in the world's largest economy. Copper rallied 26 percent this year as cuts to borrowing costs drove a decline in the dollar and prompted investors to buy commodities.

``The rebound, which we're seeing across the whole metals complex, mainly has to do with the dollar's move after last night's Fed statement,'' Liang Lijuan, analyst at Yide Futures Brokerage Co., said today.

Copper for delivery in three months rose as much as $110, or 1.3 percent, to $8,425 a metric ton on the London Metal Exchange, erasing most of the 1.4 percent decline in the past three days. The contract traded at $8,420 at 10:40 a.m. Singapore time.

``The market already priced expectations of a rate hike at the next meeting but it's less certain now so we're seeing some short-covering taking place,'' said Liang.

Copper for September delivery on the Shanghai Futures Exchange added as much as 410 yuan, or 0.7 percent, to 62,690 yuan ($9,134) a ton, and stood at 62,630 yuan at 10:12 a.m. local time.

``Chinese investors are reluctant chasers of this rally,'' said Zeng Chao, chief metals analyst at Everbright Futures Co. ``Domestic stockpiles are declining and starting to get tight. However, this being the slow consumption season, it's not getting reflected in the prices.''

Among other LME-traded metals, aluminum was up 1 percent at $3,087 a ton, zinc added 2.3 percent to $1,915, lead gained 0.7 percent to $1,795, and tin rose 1.3 percent to $23,000. Nickel had not traded as of 10:40 a.m. in Singapore.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net