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METALS-Copper up from 2-month low on weak dollar

* Trading volumes low as hurricane hits the U.S.

* Aluminium stocks rise as output grows quicker than demand

* Euro rises vs dollar on good demand at Italian debt auction

LONDON, Oct 30 (Reuters) - Copper edged up on Tuesday from a near 2-month low hit the previous session, helped by a weaker dollar and as lower prices encouraged some cautious industrial buying, but concerns about soft demand from top consumer China capped gains. Three-month copper on the London Metal Exchange (LME) traded at $7,759 a tonne in official rings, recovering from a near 2-month low of $7,670 on Monday, when it closed at $7,699. Trading volumes were low however, as Sandy, one of the biggest storms ever to hit the U.S., forced evacuations and shut down transportation. Still, with prices of most metals near 2-month lows on Monday, traders noted some industrial buyers had been tempted. ``We are seeing a bit more buying interest from consumers at this sort of price levels but we still see copper physical demand as relatively soft,'' Standard Chartered analyst Daniel Smith said. ``I don't think demand in China has got any worse, but people are recognising that growth in quite soft. Realism is starting to sink in.'' Copper is broadly flat on the year, having given back almost all its gains in recent weeks after a steep rise in September, when Europe and the United States implemented looser monetary policies. These kind of policies tend to inflate the value of hard assets such as commodities, because the relative value of paper currency falls as more cash enters circulation. Helping industrial metals, the euro rose against the dollar helped by lower Spanish and Italian bond yields. A softer U.S. currency makes dollar-priced commodities such as metals cheaper for holders of the single currency.

RISING STOCKS Fundamentals have turned a bit weaker for base metals, as slower economic growth in China weighed on its metals demand, and with metals stocks rising, especially for aluminium and copper, Stocks of aluminium in warehouses monitored by the LME and by the Shanghai Futures Exchange (ShFE) have built up significantly in the last few weeks. Bonded stocks of aluminium in China have also increased noticeably, a trend which is not likely to reverse anytime soon as new smelters bring additional capacity on stream, analysts added. ``The rise in stocks is due to the pace of growth in local production significantly outstripping the pace of growth in demand,'' Commerzbank said in a research note. Benchmark aluminium, untraded in rings was bid at $1,912 from a last bid of at $1,897 on Monday. Battery material lead traded at $2,053 from $2,007.50. Lead backwardation, or premium of the cash contract against the three-month contract, widened to $4 per tonne from $0.5 on Monday, as battery makers sought scarce supplies of the metal ahead of the peak winter battery replacement season. Costs to secure lead deliveries in Europe have doubled this month to their highest in four years as recyclers, hurt by soaring scrap prices, protect profits by producing less and asking ever higher prices from battery makers or merchants. Tin traded at $20,000 from $19,555 while zinc, untraded in rings, was bid at $1,862 from $1,825. Stainless steel material nickel, also untraded was bid at $16,070 from $15,950.

Metal Prices at 1227 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T

Metal Last Change Pct Move End 2011 Ytd Pct

move

COMEX Cu 350.95 1.50 +0.43 344.75 1.80 LME Alum 1912.25 -25.75 -1.33 2020.00 -5.33 LME Cu 7732.75 33.75 +0.44 7600.00 1.75 LME Lead 2041.00 33.50 +1.67 2034.00 0.34 LME Nickel 16045.00 95.00 +0.60 18650.00 -13.97 LME Tin 19930.00 375.00 +1.92 19200.00 3.80 LME Zinc 1853.75 28.75 +1.58 1845.00 0.47 SHFE Alu 15285.00 -85.00 -0.55 15845.00 -3.53 SHFE Cu* 56480.00 -200.00 -0.35 55360.00 2.02 SHFE Zin 14680.00 -5.00 -0.03 14795.00 -0.78 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN

SHFE ZN began trading on 26/3/07