Copper Rises From 7-Month Low in London After Freddie Mac Aid

By Chanyaporn Chanjaroen

Sept. 8 (Bloomberg) -- Copper rose in London, rebounding from a seven-month low, as the U.S. government's takeover of Fannie Mae and Freddie Mac bolstered investor confidence in the outlook for the global economy.

The MSCI World Index of stocks added 1.6 percent as of 11:14 a.m. London time, ending six consecutive declines. Crude oil and other industrial metals also advanced. Copper has shed 18 percent since the end of June on concern that slower economic growth will sap demand for metals.

``It's a rebound across the board,'' Max Layton, an analyst at Macquarie Group Ltd., said today by phone from London. ``Demand may be better than otherwise it would have been'' after the U.S. government's rescue package, he said.

Copper for delivery in three months added $80, or 1.2 percent, to $6,980 a metric ton as of 11:06 a.m. on the London Metal Exchange. It fell 8.1 percent last week, the biggest decline since January 2007.

Copper, in its seventh year of gains, may extend advances in the fourth quarter as China, the world's largest user of the metal, increases buying, Layton said. The metal price will average $8,500 a ton in the last three months of the year, Barclays Capital said Sept. 5.

The rally also boosted mining companies. BHP Billiton Ltd., the world's largest diversified miner, soared as much as 7.7 percent and Anglo American Plc rose 8.1 percent.

LME-tracked copper stockpiles fell 50 tons to 200,825 tons, the first drop since Aug. 20. Including those monitored by the exchanges in Shanghai and New York, they totaled 224,826 tons, or 4.4 days of global consumption, according to Bloomberg calculations. Last year's average was 4.9 days.

Futures Premium

Rising LME stockpiles increased availability of the metal and reduced the premium of the metal for immediate delivery. The premium over the benchmark price shrank to $29 a ton Sept. 5, from this year's peak of $241 a ton July 7.

LME data also showed the largest holders of copper stockpiles scaled back their assets last week. One firm held 50 percent to 79 percent of the inventories as of Sept. 3, down from a range of 80 percent and 89 percent at the end of August. The exchange doesn't publish the identity of stockpile owners.

Aluminum increased $23 to $2,670 a ton. China's top 20 smelters, the largest in the world, have cut production by more than 350,000 tons on an annual basis as part of a July agreement to reduce energy consumption and boost prices, China's Nonferrous Metals Industry Association said.

Smelting Unprofitable

The companies took production offline between July 10 and Aug. 10 as smelting became increasingly unprofitable because of higher costs, Wen Xianjun, vice chairman of the association, said in an interview. The reduction is equivalent to about 2.8 percent of the nation's production last year of 12.6 million tons, according to Bloomberg calculations.

Tin exports from Indonesia, the world's second-largest producer of the metal, fell 17 percent to 8,231 tons in August from the previous month, Trade Ministry data showed. The decline bore little significance given the high level of imports in July, ITRI Ltd.'s research manager Peter Kettle said today by phone from St. Albans, England. ITRI is funded by producers of the metal.

Tin advanced $275, or 1.5 percent, to $18,650.

Among other metals traded on the LME, lead rose $54.75, or 3.3 percent, to $1,865 and nickel jumped $200, or 1 percent, to $18,800. Zinc gained $15 to $1,765.

-- With reporting by Yoga Rusmana and Naila Firdausi in Jakarta, and Xiao Yu in Beijing. Editors: James Ludden, Stuart Wallace.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net