Copper Falls to Seven-Month Low on Dollar's Rally, Oil's Slump

By Millie Munshi

Sept. 2 (Bloomberg) -- Copper tumbled to a seven-month low as the dollar's rally and plunging energy prices reduced demand for commodities as a hedge against inflation.

The dollar rose as much as 0.9 percent against a basket of the euro, yen and four other major currencies, heading for the fourth straight gain. Crude oil plummeted as much as 8.7 percent. Before today, copper gained 11 percent this year on demand for raw materials as alternative assets.

``Weaker energy prices and a stronger dollar are weighing on copper,'' Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said in a report. ``The wheels seem to be coming off the commodity markets.''

Copper futures for December delivery declined 7.2 cents, or 2.2 percent, to $3.2355 a pound at 9:29 a.m. on the Comex division of the New York Mercantile Exchange. The price earlier touched $3.159, the lowest for a most-active contract since Jan. 28.

The Reuters/Jefferies CRB Index dropped as much as 4.2 percent.

On the London Metal Exchange, copper for delivery in three months dropped $137, or 1.9 percent, to $7,168 a metric ton ($3.25 a pound). Before today, the price declined 2.1 percent in the past 12 months.

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