Copper Rebounds in New York as Weaker Dollar May Spur Demand

By Millie Munshi

Sept. 24 (Bloomberg) -- Copper rose, rebounding from its biggest drop in two weeks, on speculation that a weaker dollar will revive demand from investors seeking a hedge against inflation.

The dollar lost as much as 0.6 percent against the euro today. Copper and other commodities, mostly traded in dollars, often move in the opposite direction of the U.S. currency. Before today, the metal gained 3.7 percent this year, partly because of improved demand from investors seeking a store of value.

``Copper is finding some support with the weakness in the dollar today,'' said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. ``The lower dollar is making the metals look attractive.''

Copper futures for December delivery rose 1.15 cents, or 0.4 percent, to $3.1635 a pound at 9:17 a.m. on the Comex division of the New York Mercantile Exchange. The contract fell 3.2 percent yesterday, the most since Sept. 5.

Still, copper's gains will be limited on speculation slower economic growth will reduce demand for the metal, used in pipes and wires, McGhee said.

``Copper will be an underperformer in the metals sector until the economy starts to look better,'' he said.

On the London Metal Exchange, copper for delivery in three months added $55, or 0.8 percent, to $7,035 a metric ton ($3.19 a pound). The metal touched a record $8,940 a ton on July 2.

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