METALS-Copper edges down as economy worries weigh

* U.S housing starts jump, industrial output down

* Analysts question whether prices reflect fundamentals

* Aluminium stocks back at record highs

(Recasts, updates prices)

By Rebekah Curtis and Humeyra Pamuk

LONDON, June 16 (Reuters) - Copper edged down on Tuesday to
its lowest level in more than a week after a weak dollar failed
to provide support as investors worried that prices might have
exceeded fundamentals in the face of mixed economic data.

Copper for three-months delivery MCU3 on the London Metal
Exchange touched $4,922 a tonne, its lowest since June 8, before
closing at $4,980, down $26 from Monday. It rose as high as
$5,090.25 a tonne during the session.

The dollar slid across the board, making industrial metals
cheaper for local currency holders, after comments from Russia
suggesting a need for a global reserve currency other than the
greenback.[FRX/]

Dollar weakness and a jump in May U.S. housing starts and
permits boosted metals earlier. However, a fall in U.S.
industrial output and U.S. stocks turning negative fuelled
concerns on whether prices had run ahead of supply and demand.

"Any positive data that comes out seems to be soaked up by
industrial metals," analyst Carl Firman at Virtual Metals said.
"But do the fundamentals support these prices? I don't think so.
The fundamentals are still pretty weak," he said.

A spate of improving data in early June sparked a strong
rally in copper, used in power and construction, bringing the
metal's gains in 2009 to more than 60 percent, supported largely
by demand from China, the world's top copper consumer.

This floor appears to be falling away, as demand from China
was likely underpinned by stock-piling that is now subsiding,
and as markets enter a traditionally quieter trading season.
The market seemed to shrug off supply side news from
Africa's top copper producer, Zambia, where a nationwide power
blackout has forced copper mines to trim output and shut down
machinery.[ID:nLG31563]

Instead, major market players continued to raise their
concern about fundamentals. Global miner Rio Tinto (RIO.L) said
its trading outlook for the rest of 2009 was uncertain due to
pricing of its main commodities. [ID:nSYD42810]

"If you look at the likes of aluminium, the market is awash
with metal, LME stockpiles are at their highest and yet the
prices have rallied alongside with the complex," Firman said.

The power-intensive metal MAL3 was at $1,610 from $1,609.
Stocks of aluminium once again shot up, rising 47,225 tonnes to
a record above 4.3 million tonnes. Inventories have struck
record highs repeatedly this year as demand has waned.

Analysts say due to the ailing auto demand, coupled with the
troubles at General Motors (GM.N), inventories are set to remain
swollen.[ID:nN29605630]

Zinc MZN3 was $1,569 from $1,575, while battery material
lead MPB3 was at $1,650 from $1,677. Nickel MNI3 was higher
at $15,100 from $14,775.

Tin MSN3 was at $15,375 from $15,050. On Monday, the metal
moved into contango -- a premium for three-month contracts over
cash -- from backwardation for the first time since early
October. The contango is currently at $29.

The backwardation, near $300 in early June, has coincided in
recent months with a strong dominant position sometimes holding
as much as 90 percent of LME tin stocks. Bucking this trend,
latest data indicates no major dominant position on tin.

Metal Prices at 1611 GMT
Metal Last Change Pct Move End 2008 Ytd Pct

move
COMEX Cu 227.00 -1.15 -0.50 139.50 62.72
LME Alum 1605.00 -4.00 -0.25 1535.00 4.56
LME Cu 4980.00 -26.00 -0.52 3060.00 62.75
LME Lead 1650.00 -27.00 -1.61 999.00 65.17
LME Nickel 14850.00 75.00 +0.51 11700.00 26.92
LME Tin 15250.00 200.00 +1.33 10700.00 42.52
LME Zinc 1560.00 -15.00 -0.95 1208.00 29.14
SHFE Alu 13335.00 50.00 +0.38 11540.00 15.55
SHFE Cu* 39350.00 -420.00 -1.06 23840.00 65.06
SHFE Zin 13460.00 -50.00 -0.37 10120.00 33.00
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07

(Additional reporting by Michael Taylor; editing by Peter
Blackburn)