UPDATE 6-Nickel slips over 5 pct on demand worries

(Updates prices to LME close, adds comment para 6-7,10-11,15)

By Daniel Magnowski

LONDON, May 27 (Reuters) - Industrial metal nickel fell over
5 percent on the London Metal Exchange on Tuesday as investors
worried about slowing demand for stainless steel, its main
consuming market.

Nickel MNI3 for delivery in three months touched a low of
$22,800 per tonne, down 5.4 percent, before narrowing losses to
close at at $23,300, down $800 from Friday's close.

Last Friday it hit a two-year low of $22,350, and prices are
down over 10 percent since the start of the year and they are
less than half since May last year.

Investors sold the metal on the basis that demand growth for
stainless steel may falter if the overall economic outlook
worsens.

"The market had a collective change in sentiment about a
week ago, and this is a continuation of that," Merrill Lynch
analyst Daniel Hynes said. "It's going to remain fairly tough
for nickel."

The move lower, despite an overall stronger market, showed
just how vulnerable nickel still is, analysts said.

"We really do not see any support on the longer-term charts
until much lower levels," said analyst Edward Meir at MF Global
in a report.

Among other metals copper MCU3, an increasingly popular
alternative investment and a key gauge of underlying economic
activity, was up $10 at $8,190 per tonne.

In the copper market analysts worried about the absence of
Chinese restocking, but at the same time looming supply
disruptions supported prices with possible strikes in Latin
America and concerns about energy shortages in various parts of
the world.

Copper found support at $8,050 per tonne, while upside
resistance was at $8,420, Meir said.

"We do not see much of a case to make for copper either way
at this stage; the upside is capped by concerns about flagging
demand, while supply issues are contributing a measure of
support on the downside," he said.

LME aluminium MAL3 slipped $5 to $2,996 per tonne, with
concerns that higher energy prices could derail smelter
expansion plans underpinning prices.

Norwegian aluminium group Norsk Hydro (NHY.OL: Quote, Profile, Research) said on
Monday that aluminium markets were stronger than expected and
prices were more likely to rise than fall. [ID:nL26276886]

Chief Executive Eivind Reiten said in an interview that
strong Chinese demand more than offset effects of a weak U.S.
economy, and saw global aluminium demand up 8-9 percent in 2008.

Western world unwrought aluminium stocks fell to 1.569
million tonnes at the end of April, compared with a 1.607
million in March, provisional International Aluminium Institute
(IAI) figures showed.[ID:nCOM000145]

Zinc MZN3 was up $6 at a quoted $2,151 per tonne, lead
MPB3 was up $41 at $2,050 and tin MSN3 was up $450 at
$24,200 per tonne.

Metal Prices at 1600 GMT:
Metal Last Change Pct Move End 2007 Ytd Pct

move
LME Cu 8190.00 10.00 +0.12 6670.00 22.79
SHFE Cu* 62230.00 -510.00 -0.81 56880.00 9.41
LME Alum 2997.00 -4.00 -0.13 2403.00 24.72
SHFE Alu* 19095.00 -135.00 -0.70 18180.00 5.03
COMEX Cu** 375.05 -0.45 -0.12 303.50 23.57
LME Zinc 2150.00 5.00 +0.23 2370.00 -9.28
SHFE Zinc* 17680.00 -300.00 -1.67 18950.00 -6.70
LME Nick 23300.00 -800.00 -3.32 26350.00 -11.57
LME Lead 2055.00 46.00 +2.29 2550.00 -19.41
LME Tin 24200.00 450.00 +1.89 16400.00 47.56
** 1st contract month for COMEX copper
* 3rd contact month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07

(Additional reporting by Anna Stablum, editing by Nigel
Hunt)