* Copper prices rise on London Metal Exchange
* Concerns about Chinese demand linger, but strikes support
* Aluminium hits highest level in almost two months
* Lead up despite rising stocks
(Updates prices to LME close, refreshes comment)
By Daniel Magnowski
LONDON, June 18 (Reuters) - Copper futures rose more than 2 percent on the London Metal Exchange on Wednesday as bullish sentiment on widening labour unrest in Peru outweighed worries about softer demand in China, while lead climbed almost 5 percent.
Copper MCU3 for delivery in three months, often seen as a key gauge of underlying economic activity, ended the final open outcry session up $152 at $8,240 per tonne, after hitting $8,288 in earlier trade.
Lead MPB3 traded up $87 to an intraday high of $1,952 per tonne before giving up those gains to end the day at $1,860, down $5 from Tuesday's close.
"We see it as a relatively tight market," Merrill Lynch analyst Daniel Hynes said of lead, despite exchange-registered inventories jumping around 20,000 tonnes in the past three days to 96,775 tonnes, enough for around 4 days of world consumption.
"The fundamentals look quite good," he said. "The market seems to be relatively bullish."
Copper was supported by ongoing labour unrest in Peru.
Workers at Southern Copper's PCU.N SPC.LM Cuajone mine went on strike to demand better benefits. They joined miners at Peru's third-largest copper pit, Cerro Verde CVE.LM, where a walkout is in its second week. [ID:nN17374412]
"Supply uncertainties give some price support," Lehman Brothers analyst Michael Widmer said in a report.
Copper is well down from the all-time high of $8,880 it hit earlier this year as investors bought the metal in the hope Chinese demand would offset a Western world slowdown, but is still up around 20 percent since the start of 2008.
LME aluminium MAL3 closed up $34 at $3,080 per tonne, having earlier traded up to $3,122, its highest in almost two months, after rallying 2.3 percent overnight.
"The support has really been from high oil prices as it's an energy-intensive metal," Merrill Lynch's Hynes said.
High costs of producing metal will require high sales prices in the foreseeable future, analysts said.
"The impact that rising costs for energy, manpower and equipment are having on the mining industry and the marginal cost of production is starting to bite, and will help support metals prices," Standard Bank said in a weekly report.
A fall in the value of the dollar against a basket of other currencies has also boosted dollar-denominated metals, as holders of other currencies are able to buy more for their cash.
The dollar recovered some recent losses on Wednesday, but its gains were capped by the waning expectation that the Federal Reserve will raise interest rates in August.
Zinc MZN3 was up $115 at $1,990 per tonne, tin MSN3 was $425 higher at a quoted $22,450 per tonne while nickel MNI3 was down $1,075 at $23,075 per tonne.
Metal Prices at 1543 GMT Metal Last Change Pct Move End 2007 Ytd Pct
move LME Cu 8210.00 122.00 +1.51 6670.00 23.09 SHFE Cu* 61340.00 -90.00 -0.15 56880.00 7.84 LME Alum 3075.00 29.00 +0.95 2403.00 27.97 SHFE Alu* 19305.00 300.00 +1.58 18180.00 6.19 COMEX Cu** 373.70 7.85 +2.15 303.05 23.31 LME Zinc 1940.00 65.00 +3.47 2370.00 -18.14 SHFE Zinc* 16010.00 360.00 +2.30 18950.00 -15.51 LME Nick 23050.00 -1100.00 -4.55 26350.00 -12.52 LME Lead 1865.00 0.00 +0.00 2550.00 -26.86 LME Tin 22475.00 450.00 +2.04 16400.00 37.04 ** 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 Chloe Fussell; editing by David Evans)