COMMODITIES-Boosted by weak dollar, economic optimism

* Crude up 1.6 pct, copper rises 1 pct on weak dollar

* Gains overdone fundamentally

* Market focuses on US retail sales, business inventory data

SINGAPORE, May 13 - Oil extended gains towards $60 a barrel on Wednesday, followed on its heels by base metals and gold, bolstered by a slide in the dollar to a four-month low and optimism over a global economic recovery.

Oil gained 1.6 percent, copper added almost 1 percent in London and 1.6 percent in Shanghai, and gold notched a half percent rise as the greenback dropped against a basket of currencies

The market is on alert for March business inventory figures and U.S. April retail sales, due later. Sales are expected to remain unchanged from from a 1.2 percent decline in March, a Reuters poll of economists showed.

In a market that until recently has endured months of negative news, any hints of recovery are seized upon as reasons to buy. This has helped lift the Reuters-Jefferies CRB index, which tracks 19 commodities, up 6 percent this year, while copper has jumped more than 50 percent and oil is up by a third.

"The market is very geared towards the positive -- investors are ignoring the downside risk and focusing almost exclusively on the positive," a commodities trader in Singapore said.

"Potentially that's risky. We have seen very steep gains in the past month or two and very few people think they are fundamentally justified."

By 0700 GMT, U.S. crude for June delivery had risen 97 cents to $59.82 a barrel. It settled 35 cents higher at $58.85 a barrel on Tuesday, off an earlier peak of $60.08, its highest level since November.

"Sentiment has been pretty bullish for the better part of the last month or two, and we believe crude will find $60 as the floor and trend higher in the next few weeks," said Peter McGuire, managing director of Commodity Warrants Australia.

"Also, we're moving into the period of higher demand in the northern hemisphere and hurricane season, which could affect supplies from the U.S. Gulf, so we expect a range of $61-$62 pretty soon."

Copper for three-month delivery on the London Metal Exchange gained $40, or nearly 1 percent, to $4,635.

The third-month benchmark copper futures contract on the Shanghai Futures Exchange rose 1.6 percent to 37,540 yuan a tonne at the close.

"If oil stands steady above $60, it will obviously support copper prices," said Zhou Jie, an analyst with Shanghai CIFCO Futures, adding that if the local stock market continued to be buoyant, it could help underpin the metals market.

But analysts warned the arrival of the seasonal slowdown for copper consumption in China, growing supply thanks to record-high imports in the last few months and rising domestic output in April, may weigh on prices.

Spot gold rose to $925.80 per ounce, up 0.4 percent from New York's notional close of $921.85.

U.S. gold futures for June delivery were $926.2 an ounce, up 0.2 percent from Tuesday's settlement on the COMEX division of the New York Mercantile Exchange.

A Singapore-based trader said gold's upward momentum was triggered after stop-loss orders were hit at $925, lifting prices above $927.

"There's been a follow-through buying but physical selling is capping tops, keeping trading in a $925-$927 range," he said.

With investors seeing stock market gains as reflecting increasing optimism over the economy, money flowing into gold-backed securities has stalled.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings stood at 1,104.09 tonnes as of May 12, unchanged since May 6.