METALS-Copper gains on weaker dlr, data mixed

* Aluminium hits 4-wk high, inventories fall for second day

* Weak dollar offers industrial metals support

* Macro data mixed, offer little true direction

(Recasts lead, updates closing prices, adds detail)

By Rebekah Curtis and Michael Taylor

LONDON, June 4 (Reuters) - Copper reversed earlier losses to
punch through the psychological $5,000 level late on Thursday as
a weaker dollar gave support, while mixed economic data kept
demand concerns alive.

Aluminium prices rose more than 5 percent to the highest
level in four weeks after a second day of inventory falls
boosted prices.

Copper for three-months delivery MCU3 on the London Metal
Exchange closed at $5,025 a tonne, from a close of $4,915 on
Wednesday. It earlier hit a session high of $5,038.

The metal used extensively in power and construction rose to
a seven and a half month high of $5,145 a tonne earlier this
week as stronger data fanned speculation the global economy may
be convalescing, but weaker U.S. data on Wednesday cooled the
optimism.

Analysts maintain the economic outlook is improving as the
rate of bad news slows but view the recent market gains as over
zealous.

"People don't expect a dramatic, swift recovery, but they do
expect a recovery," Standard Bank analyst Leon Westgate said.

"People are now brave enough to look a bit further forward
now that things appear to have bottomed. China's economy is
growing and the economic data is not great but it's not getting
worse," Westgate added.

As well as weak U.S. jobs data, the service sector, which
accounts for about 80 percent of U.S. economic activity, shrank
for the eighth straight month in May. But the rate of
contraction slowed. [ID:nL480256]

On the upside however, data showed that fewer U.S. workers
filed new claims for jobless benefits for a third straight week
and productivity rose. [ID:nN04201550]

"A lot of new investment into base metals was on the back of
this dollar weakness," said Justin Lennon, an analyst at Mitsui
Bussan Commodities in New York.

A weak U.S. currency makes metals priced in dollars less
expensive for holders of other currencies. [USD/]

"Copper is fairly valued," he added. "China is going to be
easing up on its consumption of it and while imports may appear
stronger than normal, that is due to the scrap situation."

On the corporate front, Rio Tinto (RIO.AX: Quote, Profile, Research) (RIO.L: Quote, Profile, Research) is
looking at new ways to deal with its huge debt burden, the
mining group said in response to reports its planned $19.5
billion stake sale to China's Chinalco has collapsed.
[ID:nSYD357712]

ALUMINIUM STOCKS FALL

Aluminium MAL3, used in transport and packaging, closed at
at $1,564.5 a tonne from $1,482 but earlier hit $1,585 -- its
highest since May 7.

Inventory data offered some respite for the metal used in
transport. Stocks fell for the second session in a row, dropping
6,900 tonnes to break a relentless rise since April 20 that has
brought levels to above 4.2 million tonnes.

But the outlook for aluminium is weak as potential
production restarts in China threaten to flood the market with
material and as the auto sector continues to languish.

"I'm worried that on any pick-up in prices, a lot of
facilities in China could get restarted, and that could temper
any further (price) rise," said Charles Kernot, a mining analyst
at Evolution Securities.

Among other industrial metals, zinc MZN3 closed at $1,575
from 1,535, battery material lead MPB3 ended at $1,665 from
$1,615.

Tin MSN3 closed at $14,700 versus $14,500 but earlier hit
$14,800 -- its highest point since mid-November. The metal
remained in a high backwardation -- a premium for nearby
material over three-months contracts -- above $200. Signalling a
potential squeeze, data shows a dominant position controlling
about 90 percent of cash warrants on LME stocks.

Nickel MNI3 ended at $14,700 from $14,200.

Metal Prices at 1617 GMT
Metal Last Change Pct Move End 2008 Ytd Pct

move
COMEX Cu 228.05 6.90 +3.12 139.50 63.48
LME Alum 1560.00 78.00 +5.26 1535.00 1.63
LME Cu 4995.00 -55.00 -1.09 3060.00 63.24
LME Lead 1644.00 29.00 +1.80 999.00 64.56
LME Nickel 14550.00 -70.00 -0.48 11700.00 24.36
LME Tin 14650.00 150.00 +1.03 10700.00 36.92
LME Zinc 1560.00 25.00 +1.63 1208.00 29.14
SHFE Alu 13010.00 -65.00 -0.50 11540.00 12.74
SHFE Cu* 39490.00 -1150.00 -2.83 23840.00 65.65
SHFE Zin 13170.00 -160.00 -1.20 10120.00 30.14
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07

(Reporting by Michael Taylor; editing by Keiron Henderson)