By Anna Stablum Dec. 17 (Bloomberg) -- Copper fell the most in a week in New York and London as the dollar gained for a third day, reducing the metal’s appeal as an alternative investment. The U.S. Dollar Index, a measure against six other currencies, gained as much as 1.1 percent, making dollar-priced commodities more expensive for holders of other monies. The dollar rose before a report forecast to show a gauge of the outlook for the U.S. economy improved. “The dollar will always have an intraday impact,” Leon Westgate, an analyst at Standard Bank Group Ltd. in London, said by phone. “The leading indicators give you a gauge, if the perception is that the U.S. economy is picking up, then it will add to the general feeling that things are improving and potentially down the line demand for metals will pick up.” Copper for March delivery dropped 7.1 cents, or 2.2 percent, to $3.1345 a pound on the New York Mercantile Exchange’s Comex unit at 8:20 a.m. A 2.2 percent drop is the biggest since Dec. 7. Copper for three-month delivery fell 2.2 percent to $6,885 a metric ton on the London Metal Exchange. The metal has more than doubled this year on expectations for a recovery in demand, record first-half imports in China, the world’s largest user, and a weaker dollar. The U.S. Dollar Index slid 4.3 percent this year as the Federal Reserve held interest rates near zero in an effort to revive the world’s largest economy. The Fed, after concluding a two-day meeting yesterday, said most of its lending programs would expire as scheduled Feb. 1 because of “improvements in the functioning of financial markets.” Low Interest Rates Low interest rates would support prices because “when money is cheap, risk appetite is back in force,” Westgate said. The index of U.S. leading indicators probably rose for an eighth consecutive month in November, economists said before a report today. The Conference Board’s gauge of the outlook for the next three to six months rose 0.7 percent after a 0.3 percent October gain, according to the median forecast of 61 economists surveyed by Bloomberg News. The report is scheduled for 10 a.m. in Washington. Copper stockpiles monitored by the LME expanded for a 33rd day, to 474,575 tons, the highest since April. Canceled warrants, or metal earmarked for delivery from warehouses, slumped 29 percent to 1,825 tons and account for 0.4 percent of total stockpiles, down from 21 percent in May. The contango, or discount between copper for immediate delivery and the three-month contract, widened to $42 a ton on Dec. 16, the lowest since Nov. 20 last year. A market in contango often signals plentiful supplies, in contrast the market traded at a premium of $21, this year’s high on July 14. Among other LME metals for three-month delivery, aluminum fell 1.5 percent to $2,242 a ton. LME monitored stockpiles rose to a record of 4.64 million tons today. Nickel shed 2.3 percent to $17,100 a ton, zinc declined 1.8 percent to $2,390.50 a ton and lead slipped 2.2 percent to $2,357.50 a ton. Tin gained 0.8 percent at $15,600 a ton. To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net

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