Unrest in equities, record gold support base metals

By Nick Trevethan

SINGAPORE (Reuters) - Problems in the banking sector, a record weak dollar and rocketing gold prices helped support base metals prices on Monday, with London copper gaining nearly 1 percent.

Copper for delivery in three months MCU3 on the London Metal Exchange rose $60 to $8,435 a tonne at 0200 GMT, but is still down around 4 percent from a record $8,820 set in early March.

A surprise cut in the U.S. Federal Reserve's discount rate and JPMorgan Chase & Co's (JPM.N: Quote, Profile, Research, Stock Buzz) plan to buy stricken U.S. investment bank Bear Stearns BSCN> for just $2 a share sent the dollar tumbling to a fresh record low against the euro, making dollar-denominated assets like base metals cheaper for holders of other currencies.

"The currency move may help copper, but gold will be the main beneficiary as a hedge against global risk," ANZ senior commodities analyst Mark Pervan said.

"But, some of the better performing commodities markets, other than gold, may see some profit taking as investors sell to cover margins on equity losses."

Gold jumped 3 percent to a record $1,030.80 an ounce.

The June copper contract SCFM8, the most active on the Shanghai Futures Exchange, rose 100 yuan to 67,500 yuan ($9,520) a tonne. Copper rallied above 70,000 yuan in early March.

"Shanghai and London copper rallied higher in the first 15 minutes, but we quickly saw dealers selling into the strength," a trader in Shanghai said.