METALS-Copper erases losses as equities rise, dollar dives

* Equities rise, dollar falls

* Metal inventories fall across the complex

* Traders see copper rangebound after recent gains

(Updates prices and comments)

By Michael Taylor

LONDON, Sept 8 (Reuters) - Copper reversed earlier losses
and climbed higher on Wednesday after equity markets moved into
positive territory and the dollar lost ground as concerns about
the European banking sector seemed to have eased for now.

Benchmark copper for three-month delivery CMCU3 on the
London Metal Exchange ended the day at $7,675 a tonne from
$7,629 at the close on Tuesday and compared with a session low
at $7,565.50.

"The risk aversion seems to be lower," said analyst Eugen
Weinberg at Commerzbank. "Prices in equity markets are moving
higher and the dollar's losing ground," he said.

U.S. stocks rose at the open on Wednesday, tracking European
stocks and ahead of Federal Reserve comments on the state of the
economy, while the euro recovered from losses and rose against
the dollar and the yen. [.N][.EU][FRX/]

A weaker dollar makes industrial metals cheaper for non-U.S.
currency holders.

Concerns about euro zone banks and sovereign debt had
prompted investors to dump riskier assets on Tuesday, sending
copper to its lowest in almost a week. [ID:nLDE6870TB]

"It is frustrating for people trying to get behind the
metals complex, because we keep getting side-swiped by broader
macro concerns," said Nick Moore, global head of commodity
strategy at RBS Global Banking & Markets.

A Reuters poll on Wednesday of 250 economists showed major
developed economies were poised for a marked slowdown in coming
quarters, led by the United States, although another recession
still looks unlikely. [ID:nLDE6870Z2]

CONFIDENT ON CHINA

Copper, used in power and construction, touched a four-month
high on Friday at $7,750 a tonne, boosted by
better-than-expected data in the United States and China.

Investors are now awaiting preliminary trade data from
China, expected on Friday.

"We are confident that the world's largest consumer of base
metals is still on track to deliver strong growth this year,"
said analyst Andrey Kryuchenkov at VTB Capital said.

"The restocking will be driven by seasonal demand factors,
with a pickup in economic activity later this autumn."

Also aiding overall sentiment in recent months has been a
growing trend of falling LME inventories. Latest LME data showed
that on Tuesday, copper stocks slipped 975 tonnes to 394,500
tonnes, having fallen from 6-1/2 year highs at 555,075 tonnes in
mid-February.

Aluminium CMAL3 traded at $2,160 a tonne versus a last bid
at $2,164 on Tuesday. LME stocks for the metal, used in
transport and packaging, dipped 1,125 tonnes to remain near
record levels at 4.41 million tonnes.

A large portion of those aluminium stocks are tied up in
finance deals. [ID:nGEE5BA277]
"Inventories -- a nice clean flush, all down today -- but
that's not really playing in," said RBS's Moore.

Steel-making ingredient nickel CMNI3 traded at $22,900 a
tonne from $22,190 while battery material lead CMPB3 was at
$2,234 a tonne from $2,184.

Zinc CMZN3 was at $2,219 a tonne from $2,189 and tin
CMSN3 hit $21,675 from a close of $20,900 as worries about
supplies remained due to dominant position controlling between
40-50 percent of cash warrants on LME stocks. <LME/WC>

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Metal Prices at 1609 GMT
Metal Last Change Pct Move End 2009 Ytd Pct

move
#VALUE!
LME Alum 2153.00 5.00 +0.23 2230.00 -3.45
LME Cu 7664.00 35.00 +0.46 7375.00 3.92
LME Lead 2225.00 41.00 +1.88 2432.00 -8.51
LME Nickel 22700.00 510.00 +2.30 18525.00 22.54
LME Tin 21450.00 550.00 +2.63 16950.00 26.55
LME Zinc 2215.00 26.00 +1.19 2560.00 -13.48
SHFE Alu 15685.00 -40.00 -0.25 17160.00 -8.60
SHFE Cu* 59810.00 100.00 +0.17 59900.00 -0.15
SHFE Zin 18070.00 110.00 +0.61 21195.00 -14.74
** 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 Humeyra Pamuk; editing Alison
Birrane and Keiron Henderson)