Copper ends up on soft dollar, pre-Fed positioning

NEW YORK/LONDON, Nov 2 （Reuters） - Copper ended firm onTuesday, climbing back toward the two-year highs it hit last weekas the weak dollar bolstered risk appetite and positive European manufacturing data brightened global demand prospects. Gains were driven by investors who anticipated further lossesin the dollar due to another round of government debt purchases,or quantitative easing, by the U.S. Federal Reserve on Wednesdayas it attempts to boost the world's largest economy.

"I think people are positioning in the copper for the Fed announcement, and what are they going to say about the dollar,"said Bob Haberkorn, senior market strategist with Lind-Waldock in Chicago. "The position that the Fed has taken is a weak dollar to boostexports and boost demand, which in turn is extremely bullish forcopper," he said.

On the London Metal Exchange （LME）， three-month copper CMCU3closed up $135 at $8,435 a tonne, but remained below last month'speak of $8,554 which was the highest since July 2008. Copper for December delivery HGZ0 on the COMEX metalsdivision of the New York Mercantile Exchange rose 5.40 cents, or 1.4 percent, to finish at $3.8390 per lb, near the upper end of its $3.77 to $3.8410 range.

Last week, COMEX December copper touched $3.90 per lb, thehighest level for second-position futures contract since July2008. "All the planets have lined up for copper," said David Thurtell, an analyst at Citi. "There have been some very encouraging numbers out in the last 24 hours," he added. "The outlook is more favorable than it's beenfor a couple of months in terms of very important forward indicators."

Indeed, Euro zone manufacturing gathered steam last month, abusiness survey showed one day after better-than-expected U.S. andChinese factory data increased optimism about the global economyand revived risk appetite.

But near-term price direction in the broader commodities complex is likely to be influenced by what the Fed says and doeson Wednesday.  "With the right news, I think copper wants to trade back to$4.00 （per lb），" said Frank Lesh, broker and futures analyst withFuture Path Trading in Chicago. "We may come off on a little disappointment over not enoughfree money as expected, but even if it sets back, it just meanswe'll be buying the dip instead of buying the breakout."