Nov. 4 (Bloomberg) -- Copper rose for a second day in New York as the dollar fell on speculation that the Federal Reserve will keep U.S. interest rates near zero at its meeting today.

Fed officials may indicate their $1 trillion injection into the economy is helping to revive growth without requiring higher borrowing costs, according to economists. The U.S. Dollar Index, a six-currency gauge of the greenback’s performance, fell as much as 0.8 percent. Some traders buy commodities as the greenback weakens to preserve purchasing power.

“There’s a mistrust of fiat currencies now, and the expectation is the dollar will continue to weaken,” said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York. “People are shifting away from paper currencies and buying hard assets like copper.”

Copper futures for December delivery gained 3.7 cents, or 1.3 percent, to $2.993 a pound on the New York Mercantile Exchange’s Comex unit. The most-active contract fell 2.6 percent last week as the dollar gained.

“There are expectations of a weaker dollar,” said David Wilson, a Societe Generale SA analyst in London. “The big thing to watch is the outcome of the Fed meeting.”

The Federal Open Market Committee will release a statement at around 2:15 p.m. in Washington.

Service Industries Slow

Copper pared gains after a report showed the growth in U.S. service industries, which make up almost 90 percent of the economy, unexpectedly slowed in October.

The Institute for Supply Management’s index of non- manufacturing businesses fell to 50.6 from 50.9 in September, the group said today. An increase to 51.5 was the median forecast of 77 economists surveyed by Bloomberg News. A reading above 50 signals expansion.

Copper prices have more than doubled this year, helped by record first-half shipments into China, the world’s biggest user of the metal.

The metal may rebound to $4 a pound next year on recovering U.S. and European economies and a lack of new supply, according to Oscar Gonzalez Rocha, the chief executive officer of Southern Copper Corp. Copper touched a record $4.2605 on May 5, 2008.

“By next year, the American economy and most of Europe will have recovered from the crisis and consumption will be up,” Rocha said yesterday in an interview. Southern Copper is the biggest producer of the metal in Peru and Mexico.

On the London Metal Exchange, copper for three-month delivery rose $115, or 1.8 percent, to $6,575 a metric ton ($2.98 a pound). Aluminum, zinc, tin, lead and nickel also rose.

To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.netMillie Munshi in New York at mmunshi@bloomberg.net.

Last Updated: November 4, 2009 14:15 EST