METALS-Copper ends up on soft dollar, pre-Fed positioning

* Markets expect more quantitative easing in United States

* Collahuasi strike threats remain

* Coming up: U.S. FOMC monetary policy announcement Wed.
(Recasts with New York closing copper price, adds New York
dateline/byline, graphic and analyst comments)

By Chris Kelly and Melanie Burton

NEW YORK/LONDON, Nov 2 (BestGrowthStock) – Copper ended firm on
Tuesday, climbing back toward the two-year highs it hit last week
as the weak dollar bolstered risk appetite and positive European
manufacturing data brightened global demand prospects.

Gains were driven by investors who anticipated further losses
in the dollar due to another round of government debt purchases,
or quantitative easing, by the U.S. Federal Reserve on Wednesday
as it attempts to boost the world’s largest economy.

“I think people are positioning in the copper for the Fed
announcement, and what are they going to say about the dollar,”
said Bob Haberkorn, senior market strategist with Lind-Waldock in
Chicago.

“The position that the Fed has taken is a weak dollar to boost
exports and boost demand, which in turn is extremely bullish for
copper,” he said.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Graphic on asset returns amid QE2 expectations:

http://r.reuters.com/kyw48p

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

On the London Metal Exchange (LME), three-month copper (CMCU3: )
closed up $135 at $8,435 a tonne, but remained below last month’s
peak of $8,554 which was the highest since July 2008.

Copper for December delivery (HGZ0: ) on the COMEX metals
division of the New York Mercantile Exchange rose 5.40 cents, or
1.4 percent, to finish at $3.8390 per lb, near the upper end of
its $3.77 to $3.8410 range.

Last week, COMEX December copper touched $3.90 per lb, the
highest level for second-position futures contract since July
2008.

“All the planets have lined up for copper,” said David
Thurtell, an analyst at Citi.

“There have been some very encouraging numbers out in the last
24 hours,” he added. “The outlook is more favorable than it’s been
for a couple of months in terms of very important forward
indicators.”

Indeed, Euro zone manufacturing gathered steam last month, a
business survey showed one day after better-than-expected U.S. and
Chinese factory data increased optimism about the global economy
and revived risk appetite. [ID:nLDE6A10TX].

But near-term price direction in the broader commodities
complex is likely to be influenced by what the Fed says and does
on Wednesday. [ID:nN02222533]

“With the right news, I think copper wants to trade back to
$4.00 (per lb),” said Frank Lesh, broker and futures analyst with
Future Path Trading in Chicago.

“We may come off on a little disappointment over not enough
free money as expected, but even if it sets back, it just means
we’ll be buying the dip instead of buying the breakout.”

SUPPLY-SIDE THREATS

The prospect of strike action at Chile’s giant Collahuasi
copper mine, the world’s No. 3 copper mine, grew after union
workers called a new wage offer from the company “strange” and
said it only addressed some of the issues at stake.
[ID:nN02207198]

Furthermore, Chinese state-run consultancy Antaike said the
nation’s domestic copper shortage would rise to 2.44 million
tonnes next year from 2.25 million this year. [ID:nTOE6A1005]

In other metals, aluminum (CMAL3: ) ended up $58 at $2,430 a
tonne. It is closing in on its five-month peaks from mid-October
at $2,459.

“There’s been a lot of investment-related buying today … it
started with the technical signals and the dollar continued to
weaken. That’s attracted fresh buying as well,” RBC analyst Alex
Heath said.

Zinc (CMZN3: ) rose $4 to $2,453 a tonne. Stocks of zinc at LME
warehouses rose by 4,225 tonnes to 632,225 tonnes, the highest
since January 2005, LME data showed. (MZN-STOCKS: )

Over the past week, 26,500 tonnes have been registered in New
Orleans warehouses, a jump of almost 10 percent in that location.
(0#MZNSTX-LOC-GRD: )

“(New Orleans) had been relatively quiet since the large draws
seen in early August, with the inflows perhaps reflecting that
material being put back on warrant once again,” added Standard
Bank’s Westgate.

Lead (CMPB3: ) gained $20 to $2,485 a tonne. LME lead stocks
jumped 2,725 tonnes to their highest level in more than 10 years,
above 200,000.

Tin (CMSN3: ) climbed $200 to $25,800 a tonne and nickel (CMNI3: )
ended at $23,475 per tonne from a last bid on Monday at
$23,245/23,250 a tonne.
Metal Prices at 1843 GMT
COMEX copper in cents/lb, LME prices in $/T and SHFE prices in
yuan/T
Metal Last Change Pct Move End 2009 Ytd Pct

move
COMEX Cu 383.00 4.50 +1.19 334.65 14.45
LME Alum 2430.00 58.00 +2.45 2230.00 8.97
LME Cu 8410.00 110.00 +1.33 7375.00 14.03
LME Lead 2492.00 27.00 +1.10 2432.00 2.47
LME Nickel 23450.00 460.00 +2.00 18525.00 26.59
LME Tin 25800.00 200.00 +0.78 16950.00 52.21
LME Zinc 2450.00 1.00 +0.04 2560.00 -4.30
SHFE Alu 16525.00 -35.00 -0.21 17160.00 -3.70
SHFE Cu* 63370.00 -210.00 -0.33 59900.00 5.79
SHFE Zin 19710.00 -230.00 -1.15 21195.00 -7.01
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Additional reporting by Rebekah Curtis in London; editing by
Keiron Henderson)

METALS-Copper ends up on soft dollar, pre-Fed positioning