LME copper hits new 13-½ mth high, eyes $7,000

By Manolo Serapio Jr.

MANILA (Reuters) - London copper rose more than 1 percent to a fresh 13-½ month peak on Wednesday and looks set to touch $7,000 a tonne, while Shanghai prices also hit multi-month highs on hopes an expected demand revival will continue to buoy prices.

Other base metals rallied alongside other commodities, with gold touching another record high on the view the dollar's weakness will persist, and oil extending gains above $79 a barrel after an industry report showed U.S. crude stocks fell sharply last week.

"There's speculative buying in Shanghai and I heard Western funds are closing short positions," said a metals trader in Shanghai. "Everybody expects prices to rise next year as the world economy recovers."

Three-month copper on the London Metal Exchange rose $84 to $6,910 a tonne at 0702 GMT, after hitting a high of $6,917, its best level since late September 2008.

Shanghai's benchmark third month copper rallied 740 yuan to close at 53,940 yuan a tonne, just off the session peak of 53,950 yuan, its highest since September 23, 2008.

Shanghai zinc jumped 295 yuan to end at 17,835 yuan per tonne, near its day-high of 17,840 yuan, a level not seen since late May last year.

The dollar drifted sideways after short-covering waned in Asia on Wednesday as investors waited for stronger trading cues including U.S. October inflation data and the minutes from the Bank of England's November meeting.

U.S. housing starts for October is also due later Wednesday as well as current account and net investment flows in the euro zone for September.