March 22, 2010, 2:37 PM EDT

By Millie Munshi and Anna Stablum

March 22 (Bloomberg) -- Copper prices gained for the first time in three sessions as the dollar’s retreat bolstered demand for commodities as alternative assets.

The greenback fell as much as 0.2 percent against a basket of six currencies, erasing gains. In 2009, copper more than doubled as the dollar dropped 4.2 percent. Earlier, the metal slid as much as 1.8 percent on concern the global economy’s recovery will be tepid.

“The dollar is going to continue be important for copper,” Matthew Zeman, a trader at LaSalle Futures Group in New York. “I don’t see copper going much higher until we get a catalyst to drive it out of its trading range. The economic picture still looks mixed.”

Copper futures for May delivery climbed 0.8 cent, or 0.2 percent, to $3.3805 a pound on the Comex in New York. The metal has gained 1 percent this year.

Gains were capped on concern that rising global interest rates and budget deficits in Europe will stifle economic growth, Zeman said.

On March 19, the Reserve Bank of India raised borrowing costs for the first time in almost two years. China, where inflation reached the highest rate in 16 months in February, also may make credit more expensive, traders said.

“The fact that China may tighten and India is already tightening is weighing heavily,” said Lannie Cohen, the president of Capitol Commodity Services Inc. in Indianapolis.

China’s Shipments

Warehouse inventories tallied by the Shanghai Futures Exchange rose 8.8 percent last week to the most since at least 2003. Last month, shipments of refined copper into China, the world’s largest user of the metal, increased 12 percent to 220,530 metric tons from January, the government said.

“People at some point should be asking themselves if these imports are for real or if they are for stockpiling,” said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt. “Demand for copper in China isn’t as strong as the data shows.”

On the London Metal Exchange, copper for delivery in three months advanced $19, or 0.3 percent, to $7,454 a ton ($3.38 a pound) at 6:19 p.m. local time. Zinc, lead and tin fell. Aluminum and nickel were little changed.

--Editors: Patrick McKiernan

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

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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