By Anna Stablum and Millie Munshi Dec. 16 (Bloomberg) -- Copper prices rose by the most in a month on speculation that continued low U.S. interest rates will support demand for the metal used in pipes and wires. The Federal Reserve may hold interest rates near zero percent while signaling the U.S. economy is gaining strength, analysts said before a policy announcement today in Washington. Copper prices have more than doubled this year as record-low borrowing costs, coupled with increased government spending, spurred economic growth and weakened the dollar. “The Fed is likely to hint that interest rates will remain at current low levels for the next few quarters,” said Jesper Dannesboe, a commodity strategist at Societe Generale SA in London. “Another year of low interest rates is good for all growth-sensitive assets, such as commodities.” Copper for March delivery rose 7.3 cents, or 2.3 percent, to $3.2145 a pound at 11:27 a.m. on the New York Mercantile Exchange’s Comex unit. A close at that price would be the biggest gain for a most-active contract since Nov. 16. The metal also climbed after a report showed improvements in the U.S. housing market and the dollar fell as much as 0.4 percent against a basket of six major currencies. U.S. housing starts rose 8.9 percent from October to an annual rate of 574,000 units, the Commerce Department reported today. Building permits, a sign of future construction, climbed to the highest number this year. Construction accounts for a quarter of all copper consumption, more than any other use except electrical applications, according to the Copper Development Association. ‘Positive’ for Demand “The housing-starts number showed a bit of a rebound for construction, and that’s positive for copper demand,” said Matt Zeman, a LaSalle Futures Group trader in Chicago. “A weaker dollar is also lifting commodities across the board.” Demand will be strong next year as consumption gains in China, the world’s biggest metal user, said Andrew Karsh. He is a co-manager of funds for the Credit Suisse Total Commodity Return Strategy team, which oversees about $4.4 billion. “Industrial metals are a favorite of ours,” Karsh said yesterday in a telephone interview from New York. “There is real demand growing from emerging markets. Copper, lead, aluminum and other metals are required to increase infrastructure in places like China and India.” On the London Metal Exchange, copper for three-month delivery gained $165.75, or 2.4 percent, to $7,060.75 a metric ton ($3.20 a pound). Also on the LME, zinc, aluminum, nickel, tin and lead rose. To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.netMillie Munshi in New York at mmunshi@bloomberg.net.

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