Copper Gains Most in a Week as Dollar's Drop Spurs Metal Demand

By Millie Munshi

Aug. 7 (Bloomberg) -- Copper rose the most in a week as a decline in the dollar boosted investor demand for commodities as an alternative investment.

The dollar fell as much as 0.6 percent against a basket of the euro, yen and four other major currencies, snapping a four- session rally. Before today, copper gained 13 percent this year, reaching a record in May, as supplies of raw materials trailed global demand.

``We expect the firmer tone to continue for the balance of the day'' as the dollar slides, said Edward Meir, an analyst at M.F. Global Ltd. in Darien, Connecticut.

Copper futures for September delivery rose 2.25 cents, or 0.7 percent, to $3.446 a pound at 9:22 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage gain for a most-active contract since July 30. The metal rose to the all-time high of $4.2605 on May 5.

A rebound in energy costs drove commodities higher, Meir said. Crude oil jumped as much as 2.7 percent on renewed supply concerns. Before today, oil tumbled 19 percent from a record on July 11. The Reuters/Jefferies CRB Index of 19 raw materials climbed as much as 0.9 percent today, snapping a five-session skid.

On the London Metal Exchange, copper for delivery in three months gained $55, or 0.7 percent, to $7,670 a metric ton ($3.48 a pound). Before today, the price dropped 1 percent in the past 12 months.

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net