By Anna Stablum Dec. 16 (Bloomberg) -- Copper rose to a one-week high in New York and London on speculation low U.S. interest rates will support demand for the metal. Federal Reserve Chairman Ben S. Bernanke and his colleagues meeting today may indicate the U.S. recovery is gaining strength without signaling higher interest rates. U.S. growth in the final quarter of 2009 will accelerate to 3 percent, according to the median of 62 economists surveyed by Bloomberg News. “The Fed is likely to hint that interest rates will remain at current low levels for the next few quarters,” Jesper Dannesboe, a commodity strategist at Societe Generale SA in London, said by telephone. “Another year of low interest rates is good for all growth-sensitive assets, such as commodities.” Copper for March delivery rose 3.65 cents, or 1.2 percent, to $3.178 a pound on the New York Mercantile Exchange’s Comex unit at 9:31 a.m. The most-active contract rose as much as 1.6 percent earlier to $3.191, the highest price since Dec. 9. Copper for three-month delivery gained 1.3 percent to $6,981 a metric ton on the London Metal Exchange. The metal has more than doubled this year on expectations of a recovery in demand, record first-half imports in China, the world’s largest user, and a weaker dollar. The U.S. Dollar Index, a gauge of the U.S. currency against six counterparts, slid 5.5 percent this year as the Fed held interest rates near zero in an effort to revive the world’s largest economy. Today, the index eased as much as 0.4 percent, making dollar-priced commodities cheaper for holders of other monies. Federal Reserve Fed officials pledged at their Nov. 4 meeting to keep rates near zero for “an extended period.” The Federal Open Market Committee will announce its decision on interest rates today at the end of a two-day meeting. The statement is due at 2:15 p.m. in Washington. “Fund managers are still holding a large part of their assets in cash, which is yielding close to no return,” Societe Generale’s Dannesboe said. “Another year of super low rates would tempt some of this cash into stocks and commodities.” U.S. housing starts rose 8.9 percent to an annual rate of 574,000, the Commerce Department said today. Building permits, a sign of future construction, climbed to the highest level in a year. Construction utilizes a quarter of all copper produced, more than any other use except electrical applications, according to the Copper Development Association. The cost of living in the U.S. accelerated in November from a month earlier. The 0.4 percent increase in the consumer- price index followed a 0.3 percent gain in October, figures from the Labor Department showed. European consumer prices in the 16-nation euro region rose 0.5 percent from a year earlier after falling 0.1 percent in October, the European Union statistics office said today. Copper Stockpiles Copper stockpiles monitored by the LME expanded for a 32nd day, rising 0.5 percent to 473,275 tons, the highest since April 16. Aurubis AG, Europe’s largest copper refiner, expects stockpiles to decline at the start of next year as demand gathers momentum, the company said in its annual report today. “Global demand for copper will increase further, provided the economic recovery in leading industrial nations continues and affects the real economy more strongly from 2010 onwards,” it said. Demand is expected to be little changed next year at 17.9 million tons, with a “limited” surplus over the next couple of years, the company said. The global copper market recorded a surplus of 196,000 tons in January to October this year, the World Bureau of Metal Statistics said. That compares with a 65,000-ton surplus a year earlier, the research company said today. Among other LME metals for three-month delivery, zinc climbed 3 percent to $2,405 a ton and lead rose 1.3 percent to $2,390.75 a ton. Zinc and lead supply outpaced demand in October as production of both metals rose from the previous month, the International Lead & Zinc Study Group said today. Aluminum rose 2 percent to $2,278 a ton, nickel advanced 1.3 percent to $17,216 a ton and tin gained 0.5 percent to $15,400 a ton. To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net

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