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Copper=20 Futures Rise Most in 8 Weeks After Earthquake in Chile =

By Millie Munshi

Nov. 14 (Bloomberg) -- Copper jumped the most in eight = weeks,=20 extending gains, after an earthquake struck Chile, the = world's=20 largest producer of the metal.

The 7.8 magnitude quake struck in Chile's northern = desert, the=20 U.S. Geological Survey said on its Web site. Before today, = copper=20 had gained 8.2 percent this year as labor disputes and mine=20 stoppages reduced supplies. The metal was in deficit by = 318,000=20 metric tons in the seven months ended July 31, the = International=20 Copper Study Group said on Oct. 29.

``Any time you have an event of this nature in a major=20 copper-producing region, it has to raise some concern about=20 supplies,'' said John Gross, director of metals management = at Scott=20 Brass Inc. and publisher of the Copper Journal. ``We don't = have=20 enough information yet to know what kind of impact it will = have on=20 supplies.''

Copper futures for December delivery added 8.2 cents, or = 2.6=20 percent, to $3.189 a pound at 11:57 a.m. on the Comex = division of=20 the New York Mercantile Exchange. A close at that price = would mark=20 the biggest increase for a most-active contract since Sept. = 19. The=20 metal had fallen for the previous five sessions, losing 7 = percent in=20 that period.

Equities Gain

The metal also rose as gains in equity markets in Europe = and Asia=20 eased concern about a worldwide economic slowdown.

``In the midst of concerns about the economy, copper and = equities=20 have tracked each other very well,'' said Eric Wittenauer, = an=20 industrial-metals analyst at A.G. Edwards & Son Inc. in = St.=20 Louis. ``With everyone thinking about what direction the = global=20 economy is going to take, a move higher in equities is = supportive=20 for copper.''

Shares rose in Asia, Europe and early in the trading day = in North=20 America, boosted by gains in company earnings. The Morgan = Stanley=20 Capital International World Index rose as much as 1.3 = percent today.=20 Copper, which generally moves in line with economic = expansion, had=20 fallen 11 percent this month before today on concern a = slowdown in=20 the U.S. would damp global growth.

Industrial metals have the highest correlation among all=20 commodities to the equity market, according to Deutsche Bank = AG.=20

The correlation between copper and equity markets has=20 strengthened in the second half of this year as investors = became=20 more concerned about the economic outlook, said Catherine = Virga, an=20 analyst at CPM Group in New York.

Stocks `Bouncing Back'

``The market has been trying to find the underlying = direction of=20 the economy during such a period of uncertainty,'' Virga = said.=20 ``There's a renewed interest in copper because stocks have = been=20 bouncing back from their lows.''

The Dow Jones Industrial Average gained as much as 0.5 = percent=20 today to 13,367.17. The index had dropped to 12,975.11 this = week,=20 the lowest since Aug. 17. Copper reached a seven- month low = of=20 $3.035 a pound on Nov. 12.

Copper extended gains after a report showed U.S. retail = sales=20 rose more than forecast in October, signaling strength in = consumer=20 spending. Sales were up 0.2 percent last month, the Commerce = Department said. The median forecast of 76 economists = surveyed by=20 Bloomberg called for a 0.1 percent rise.

The metal's rise will be limited as gaining copper = inventories=20 signal weakening demand, traders said. Stockpiles monitored = by the=20 London Metal Exchange, the world's largest metals bourse, = added 0.4=20 percent today to 178,650 metric tons. That's the highest = level since=20 April 5.

Inventories will continue to climb as demand dwindles in = the=20 U.S., the world's second-largest user of the metal, said = Kevin=20 Tuohy, a trader at MG Global U.K. Ltd. in London.

``Copper stocks are likely to increase through the end of = the=20 year,'' he said. ``We're going to see about 500 metric tons = to about=20 2,000 and 3,000 tons arriving each day.''

On the London Metal Exchange, copper for delivery in = three months=20 jumped $210, or 3 percent, to $7,135 a metric ton ($3.24 a = pound).=20 Before today, the metal had gained 9.4 percent this year as = demand=20 grew in China, the world's largest copper user.

To contact the reporter on the story: Millie Munshi in = New York=20 at mmunshi@bloomberg.net=20 .

Last Updated: November 14, 2007 12:17 EST=20

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