India copper up 2.5 pct on strong LME, weak rupee

MUMBAI, Jan 6 (Reuters) - India's copper futures rose by more than 2.5 percent in early trade on Tuesday, extending gains into a sixth day in a row, buoyed by a weaker rupee and strong London Metal Exchange, analysts said.

But gains were capped by weak demand outlook amid a global financial turmoil, a deepening recession and rising inventories, analysts said.

Copper futures surged 6 percent in Shanghai on Tuesday, while London prices rebounded from overnight losses on buying ahead of the annual re-rating by major commodity indices. See [ID:nMAN413463]

"Investors are building positions on the hope that copper may get higher weightage in the re-balacing of major commodity indices for the new year," said Devarsh Vakil, manager, research, at Anagram Capital in Ahmedabad. Meanwhile, stocks in LME warehouses continued to rise, climbing 1,500 tonnes to 342,050 tonnes -- the highest since February 2004.

Traders can wait for a dip to 160 rupees in copper to go long, Vakil said.

At 10:54 a.m., the benchmark copper February contract MCCG9 traded 2.67 percent higher at 163.25 rupees per kg. The contract gained 10.1 percent for the last five sessions. "Copper rally may continue for another two sessions and may target 174 (rupees)," said Amrut Deshmukh, a technical analyst at Way 2 Wealth Securities in Mumbai.

At 10:55 a.m., January zinc MZIF9 was 1.76 percent higher at 63.55 rupees per kg, while January lead MLDF9 was higher by 1.92 percent at 55.75 rupees per kg. (Reporting by Siddesh Mayenkar; Editing by Harish Nambiar)