Bloomberg Metal Up as Dollar Weakens (edited)

Japan’s industrial output rose 5.2 percent in April, the most in 56 years, the Trade Ministry reported. Confidence among U.S. consumers rose this month to the highest since September, according to a Reuters/University of Michigan index. India’s economy, Asia’s third-biggest, grew 5.8 percent in the first quarter, the government reported.

Positive Signs

“Recent positive economic data from Asia as well as the current weakness of the U.S. dollar are supporting prices,” said Eugen Weinberg, a senior commodity analyst at Commerzbank AG in Frankfurt. “Stronger economic data imply better demand for commodities, especially cyclical ones like base metals.”

The dollar weakened as growing evidence that the global recession is easing sent investors in search of assets with higher returns. The U.S. Dollar Index, a gauge of the greenback against six major currencies, slid as much as 1.6 percent, heading for a 6.1 percent drop in May. The index lost 1 percent last month and 2.9 percent in March.

There is the “threat of inflation right now and that means people just want to have hard assets,” said Pete Sorrentino, who helps manage $13.8 billion at Hunting Asset Management in Cincinnati.

Copper for delivery in three months added $80, or 1.7 percent, to $4,830 a metric ton ($2.19 a pound) on the London Metal Exchange.

Recent data signals “stabilization, but I don’t think it will be enough to support these prices,” Commerzbank’s Weinberg said. “Prices seem to be well ahead of the fundamentals.”

The U.S. economy shrank at a 5.7 percent annual pace in the first quarter, the Commerce Department said today. That caps the worst six-month performance in 51 years, government data show.

Among other LME metals for three-month delivery, aluminum rose 1.8 percent to $1,440 a ton. Nickel climbed 3.3 percent to $13,945 a ton. Tin jumped 4.8 percent to $14,300 a ton. Lead surged 6.2 percent to $1,570 a ton and zinc rose 6.2 percent to $1,567 a ton.

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net; Anna Stablum in London at