Copper, Nickel Rise in London as Index Funds Lift Weightings

Jan. 8 (Bloomberg) -- Copper and nickel rose in London as investment trusts including the Dow Jones-AIG Commodity Index Fund increased purchases of industrial metals. Aluminum and zinc advanced.

Investments in funds and other products tracking commodity indexes will rise to $150 billion this month, from $110 billion last year, according to Standard & Poor's. Dow Jones Indexes and Lehman Brothers Holdings Inc. said they boosted industrial- metals in their commodity funds at the start of the year.

``There's potential for metals to go higher,'' said Andy McClelland, head of industrial metals at Sucden (U.K.) Ltd. in London. Investors don't ``want to get caught short'' as index funds shift in favor of metals, he said. Sucden is one of 12 companies that trade on the floor of the London Metal Exchange.

Copper for delivery in three months added $165, or 2.4 percent, to $7,075 a metric ton as of 9:46 a.m. in London. The metal has gained 6 percent since the beginning of the year.

LME stockpiles data indicated a pickup in demand for copper. The amount of metal stockpiles bought and earmarked to be withdrawn from warehouses rose 40 percent to 15,775 tons, the LME said today in a daily report. Most of the increases took place in Busan, South Korea, near China. The so-called canceled warrants for copper have risen 134 percent in the past three sessions to the highest since July 11.

Copper inventories monitored by the LME fell 25 tons to 200,975 tons.

U.S. economic data today may suggest waning demand for copper used in homes for pipes and wiring.

The number of Americans signing contracts to buy previously owned homes probably fell 0.7 percent in November for the first time in three months, based on the median estimate of 33 economists surveyed by the Bloomberg News.

The National Association of Realtors is due to release its index of pending homes at 10 a.m. Washington time.

Nickel increased $650, or 2.3 percent, to $28,850 tons.

Lead dropped $5 to $2,585 a ton. Aluminum rose $22 to $2,490 a ton and tin rose $140 to $16,350. Zinc advanced $40 to $2,530 a ton.

Following are technical gauges for copper:
20-day moving average 6,733
100-day moving average 7,304
200-day moving average 7,447
14-day relative strength index 59.12

Fibonacci Start End 50% 61.8%
----------5,250 8,335 6,792 7,156

SOURCE