Copper Prices Jump to 1-Week High as Fed May Cut Interest Rates

By Millie Munshi

Oct. 29 (Bloomberg) -- Copper rose more than 7 percent to the highest price in a week on speculation the Federal Reserve will lower U.S. borrowing costs, reviving economic growth and demand for metals.

Interest-rate futures show a 100 percent chance the Fed will lower its benchmark interest rate by at least 0.5 percentage point to 1 percent at its policy meeting today. Copper had gained 10 percent in the previous two sessions on expectations a rallying stock market and lower borrowing costs would help ease the global economic slump.

``The perception that the Fed will ease rates today is providing a confidence boost'' and spurring price gains, said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago.

Copper futures for December delivery rose 14.4 cents, or 7.8 percent, to $2.0025 a pound at 9:10 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the metal touched $2.0125, the highest on a most-active contract since Oct. 22. The three days of gains would mark the longest rally in a month.

On the London Metal Exchange, copper for delivery in three months rose $283, or 6.9 percent, to $4,413 a metric ton ($2 a pound).

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