Copper climbed to a 10-week high as shrinking inventories, a rally in equity markets and rising U.S. home sales signaled improving demand for metal used in electrical wiring and plumbing.

Stockpiles monitored by the London Metal Exchange have slumped 7.7 percent in July, heading for the biggest monthly drop since June 2009. The MSCI World Index of shares touched a five-week high. Sales of new U.S. homes rose more than forecast in June, the government said today. Copper has rallied for six straight sessions, gaining 10 percent.

“Supplies are coming down and we’ve had a pretty good run in the stock market, which are adding to expectations for higher demand,” said Donald Selkin, the chief market strategist at National Securities Corp. in New York. “The prospects for the global recovery are looking better.”

Copper for September delivery gained 3.8 cents, or 1.2 percent, to $3.223 a pound on the Comex in New York, after touching $3.238, the highest level for a most-active contract since May 13.

Purchases of new U.S. homes increased 24 percent from May to an annual pace of 330,000, the Commerce Department said today in Washington. Economists forecast a 3.3 percent gain to an annual pace of 310,000, according to the median of 73 projections in a Bloomberg News survey.

On the LME, copper for delivery in three months rose $120, or 1.7 percent, to $7,149 a metric ton ($3.24 a pound).

Aluminum, nickel, lead and zinc also gained. Tin fell.

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

Source: http://www.bloomberg.com/news/2010-07-26/copper-rises-to-10-week-high-as-equity-housing-gains-signal-demand-boost.html