METALS-Copper at 4-mth high as inventories dip, equities up

* Fall in stockpiles lifts demand outlook

* Price rise momentum seen short lived

* European shares rise to two-week high

(Updates closing prices)

By Rebekah Curtis and Michael Taylor

LONDON, March 16 (Reuters) - Copper rose nearly 5 percent on
Monday to the highest since Nov. 14, spurred by another fall in
inventories and a rally in equity markets.

Copper MCU3 for three-month delivery on the London Metal
Exchange (LME) hit a high of $3,843.75 before closing at $3,830
a tonne from $3,746 a tonne on Friday.

Copper inventories fell 2,775 tonnes to 494,850, extending
recent falls. Cancelled warrants -- material earmarked for
delivery -- stood at 26,750 tonnes, down from 29,825 on Friday.

"It appears that the Chinese are consuming copper...There
does seem to be some demand that's soaking up the stocks," Marc
Elliott, an analyst at Fairfax, said. "(But) I'm still a bit
cautious whether this is real and sustainable."

Copper stocks have fallen more than 50,000 tonnes since late
February. Traders and analysts said the momentum from falling
inventories could be short lived as they believed most of the
inflows to China had been stockpiled by the country's state
reserve body while prices are relatively low.
"(Sentiment is) mildly positive but with an underlying
scepticism as to whether the inventory withdrawals will be
sustained," analyst Kevin Norrish at Barclays said.

China's imports of unwrought copper, including anode,
refined metal and copper alloy, surged 79.3 percent on the year
to 283,461 tonnes in February, bringing imports for the first
two months to 485,283 tonnes, up 53.5 percent from a year
earlier. [ID:nHKG241861]

China's State Reserve Bureau has contracted as much as 80
percent of its 300,000 tonnes of planned copper purchases from
the international market, industry sources have said.

European stocks hit a two-week high, lifted by hopes of the
U.S. economy starting to recover. [.EU]

BOTTOM BEFORE A BOUNCE?

But metals prices are still sharply down from record highs
reached six months ago, and several analysts were doubtful of a
possible recovery in consumption any time soon.

"Demand has not yet picked up. We expect base metal prices
will bottom out in the second half of this year before a
possible slight rebound, and will continue to rise next year,"
analyst Judy Zhu at Standard Chartered said.

Goldman Sachs cut its ratings on Anglo American (AAL.L: Quote, Profile, Research), and
cut Vedanta's (VED.L: Quote, Profile, Research) price target. [nWNAB4089]

U.S. Federal Reserve Chairman Ben Bernanke said on Sunday he
sees the U.S. economic decline moderating and recovery beginning
in 2010, although risks remain. [ID:nN15700819]

Stocks of aluminium rose 5,350 tonnes to a record near 3.4
million tonnes. LME aluminium MAL3, used in transport and
packaging, was closed at $1,358 a tonne from $1,347 a tonne.

Aluminium and other industrial metals were unaffected by
U.S. industrial production output data, which fell to its lowest
in nearly seven years.

But manufacturing eased 0.7 percent in February after
sliding 2.7 percent in January. The pace of decline slowed
thanks to an increase in the production of motor vehicle and
parts after extended plant shutdowns in January. [ID:nN16519830]

"If you look at other asset classes as well -- the same
thing happened on Friday -- equities," Michael Widmer, a metals
analyst at BNP Paribas, said.

Among other base metals, zinc MZN3 was last bid at $1,249
from $1,220 a tonne. Stocks of the metal, used to galvanise
steel, fell 1,025 tonnes.

Nickel MNI3 jumped to $10,075 from $9,600, having hit an
intra-day high of $10,220, its highest in more than two weeks,
as open interest lots climbed to over 88,345 on Friday from
82,824 the day before. <0#MNI-FUT-OI>

"Huge -- that is interesting," said Justin Lennon, an
analyst at Mitsui Bussan Commodities. "It's been a quiet market
over the five metals lately and perhaps someone is trying to
shake the market up a little bit."

Lead MPB3 closed at $1,296 from $1,249 and tin MSN3
ended at $10,350 a tonne versus $10,475.

A falling dollar also encouraged industrial metal prices, as
a weaker U.S. currency makes metals priced in dollars cheaper
for holders of other currencies. [USD/]

Metal Prices at 1712 GMT

Metal Last Change Pct Move End 2008 Ytd Pct

move
COMEX Cu 173.50 7.65 +4.61 139.50 24.37
LME Alum 1354.00 7.00 +0.52 1535.00 -11.79
LME Cu 3825.00 245.00 +6.84 3060.00 25.00
LME Lead 1300.00 51.00 +4.08 999.00 30.13
LME Nickel 10150.00 550.00 +5.73 11700.00 -13.25
LME Tin 10275.00 -120.00 -1.15 10700.00 -3.97
LME Zinc 1250.00 30.00 +2.46 1208.00 3.48
SHFE Alu 11890.00 125.00 +1.06 11540.00 3.03
SHFE Cu* 29740.00 910.00 +3.16 23840.00 24.75
SHFE Zin 10720.00 150.00 +1.42 10120.00 5.93
** 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 Alfred Cang in Shanghai, editing by
Sue Thomas)