In other commodity markets, gold closed firm after the Fed raised its key short-term interest rate only 1/4 percentage point. Oil hit a 19-month high as US Stockpiles edged lower, and grains seesawed on the weather, ending slightly higher.

At the COMEX, copper for September delivery closed 5.05 cents a pound higher at 76.65 cents a pound, the highest settlement price since last November.

Phelps Dodge's production cut of 68,000 metric tonnes a year, announced as one of several moves that will result in a $61 million charge against earnings and elimination of 1,650 jobs, came on the heels of a decision last Friday by Australia's Broken Hill Proprietary Co. Ltd to close its US Copper unit, which accounts for about 1,80,000 tons of annual production.

"On anannual basis, this moves us a lot closer to eradicating the surplus in the copper market," said John Gross, an independent copper industry consultant.

The world copper market responded almost immediately to the news. The benchmark London Metal Exchange three-month price eventually skyrocketed as much as $112, or 7.2 per cent, to $1,677 a tonne, the highest level in more than 10 months.

Analysts said that support also came from a breakdown in labour talks at Canada's biggest mine, the 1,70,000-ton-per-year Highland Valley Copper mine, which has been shut for six weeks. The company has linked a restart to more concessions from the union, and no quick deal appears likely.

"The Phelps Dodge move took the market by surprise," said director of commodity research with Salomon Smith Barney David Rinehimer. "In the wake of such bullish news, the sellers just moved to the sidelines."

Precious metals felt part of copper's updraft but also were buoyed by the Federal Reserve's move to raise its Fed funds rate byonly 1/4 percentage point and shift to a neutral stance on interest rates.

Speculation also continued that the International Monetary Fund's plan to sell gold reserves to fund debt relief for poor nations may yet be blocked in the US Congress. The US house leader Dick Armey on Wednesday urged his fellow Republicans to vote against the proposed IMF sales of gold, which Congress must approve.

August gold at the COMEX closed $1.60 an ounce higher at $263.60 and September silver closed 8 cents higher at $5.287 an ounce.

"Gold rallied modestly today," said Scott Meyers, analyst with Pioneer Futures. "The short-term trend is trying to find a bottom and the interest rate picture is out of the way for the short term. I think the market is relieved right now."

At the New York Mercantile Exchange, oil prices surged with crude oil setting a new 19-month high after a weekly US oil industry report showed an unexpected drawdown in crude stocks.

At the New York Mercantile Exchange, crude oil for August deliveryclosed 85 cents higher at $19.29 a barrel. August gasoline closed 2.45 cents a gallon higher at 56.77 cents, and August heating oil 2.50 cents a gallon higher at 49.02 cents.

Late on Tuesday, the American Petroleum Institute said US crude oil stockpiles in the week ended June 25 fell 4,88,000 barrels. Traders had expected a rise of 2 million barrels.

"Given the stock data last night, the markets have gained momentum," said John Killduff, a trader at Fimat Futures.

At the Chicago Board of Trade, grain prices seesawed on weather forecasts for a second day. Corn and soybeans closed higher on fears that hot weather expected next week in the Corn Belt states may linger and hurt the developing crops.

Soybeans for August delivery closed 3 cents higher at $4.50-1/2 a bushel and September corn rose 1-1/4 cents to $2.16-1/4. September wheat rose 1/2 cent to $2.64-1/4, with the outlook for more rain-delayed harvests providing support.