By Anna Stablum Feb. 23 (Bloomberg) -- Copper fell for a second day in New York and London as the dollar rebounded and German business confidence unexpectedly dropped for the first time in 11 months. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, rose as much as 0.4 percent, erasing a drop. A stronger dollar makes metals priced in the currency more expensive for holders of other monies. The Ifo institute said its business climate index slid to 95.2 this month. Economists had predicted a gain. “The market ran into selling as the dollar reversed losses following a weaker-than-expected German Ifo number,” said Randy North, a trader at RBC Capital Markets in London. Germany is the world’s third-biggest consumer of copper. Copper for May delivery declined 2.9 cents, or 0.9 percent, to $3.2995 a pound at 8 a.m. on the New York Mercantile Exchange’s Comex unit The most-active contract wiped out a climb of as much as 1.1 percent. Copper for three-month delivery fell 0.9 percent to $7,264 a metric ton on the London Metal Exchange. Production of the metal outpaced demand by 75,000 tons in November, the International Copper Study Group said in a report late yesterday. “High surpluses have resulted in rising inventories,” Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said in a report today. Larger Inventories Stockpiles of copper in warehouses monitored by the LME have climbed 10 percent this year after jumping 48 percent in 2009 and rose on Feb. 18 to the highest in more than six years. Inventories slipped 0.1 percent to 554,325 tons today, according to a daily exchange inventory report. “We still believe that the current copper price level is not justified by fundamentals,” Commerzbank’s Weinberg said. The bank predicted a “sharp” drop. Still, metal booked for removal from warehouses, or so- called canceled warrants, has jumped more than sixfold this year. The surge signals a pickup in movement of physical metal, Morgan Stanley analyst Peter Richardson said in a report today. “Market concerns regarding the potential for a trend- reversing correction in metal prices are unlikely to be realized,” Richardson said, citing slowing growth of warehouse inventories and improved economic data. Copper is Morgan Stanley’s most-favored metal, according to the report. Aluminum for three-month delivery was 0.1 percent higher at $2,153 a ton on the LME, zinc shed 1.8 percent to $2,250.50 a ton and nickel dropped 0.4 percent to $20,402 a ton. Lead fell 0.9 percent to $2,304 a ton and tin slid 0.7 percent to $17,050 a ton. To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net

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