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copper futures gain reversing earlier drop

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    Copper Futures Gain, Reversing Earlier Drop, as Equities Rally

    By Millie Munshi

    Nov. 3 (Bloomberg) -- Copper prices rose, reversing an earlier decline, as a rally in global equity markets eased concern that a global economic slump may be severe.

    The MSCI World Index of equities gained as much as 0.9 percent. Of all commodities, industrial metals have the highest correlation to equities, according to Deutsche Bank AG. Copper jumped 8.4 percent last week, the biggest weekly advance since May 2006, as the MSCI index soared a record 9.8 percent.

    ``There's some optimism coming back to copper now that the stocks are doing better,'' said Donald Selkin, the chief market strategist at National Securities Corp. in New York. ``People are hoping that we are past the worst part of the slowdown.''

    Copper futures for December delivery rose 1.1 cents, or 0.6 percent, to $1.84 a pound on the Comex division of the New York Mercantile Exchange.

    Investor Jim Rogers said today he is ``contemplating'' buying industrial metals including copper. Commodities will climb on supply constraints and inflationary pressures, he said today in an interview in New York.

    Miners including Freeport-McMoRan Copper & Gold Inc., the world's biggest publicly traded producer of the red metal, are curbing plans to increase production after prices fell. Copper plunged 36 percent in October, the biggest drop since the metal started trading on the Comex in 1988.

    Copper lost as much as 2.7 percent earlier today as stockpiles rose 3.2 percent to the highest level since March 2004. Inventories monitored by the London Metal Exchange jumped 7,275 metric tons to 237,925 tons. LME supplies are up 21 percent this year as slowing economic growth reduced demand for the metal used in pipes and wires.

    Slower Growth Forecast

    Credit Suisse Group cut its forecast for 2009 global copper demand, citing a slowdown in China's economic expansion. Consumption will fall 0.2 percent next year, analyst Jeremy Gray wrote in a report today. That compares with an earlier projection of a 1 percent advance. China is the world's biggest metals buyer.

    China is ``decelerating more in the fourth quarter than we saw in the third quarter,'' Rio Tinto Group Chief Executive Officer Tom Albanese said yesterday in an interview. ``That is going to lead to a deferred pickup in cumulative demand for most of the things we produce during the course of 2009.''

    Rio is the world's third-largest mining company, after BHP Billiton Ltd. and Cia. Vale do Rio Doce, ranked by 2007 revenue.

    On the LME, copper for delivery in three months dropped $9, or 0.2 percent, to $4,090 a metric ton ($1.86 a pound).

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