METALS-Copper gains on weaker dollar, China stockpiles weigh

* Dollar takes a breather, falls vs euro

* Shanghai warehouse copper stocks up 2.9 pct

* Coming up: U.S. industrial output at 1315 GMT

LONDON, March 15 (Reuters) - Copper prices edged higher on Friday, boosted by a weaker dollar and encouraging economic data from the United States, but gains were capped by high Chinese stockpiles of the metal, which reinforced uncertainty about the outlook for demand. Three-month copper on the London Metal Exchange climbed to $7,826.50 a tonne at 1014 GMT, up modestly from a close of $7,800 on Thursday. It is on track to rise 0.9 percent this week, its second straight week of gains. Prices, however, are still trading 1.6 percent lower in the year to date after the metal used in power and construction shed more than 4 percent in February. Metals prices were boosted as the dollar took a breather from its recent sprint, slipping against the euro and a basket of currencies. A weak dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies. Upbeat U.S. data this week on jobs, retail sales and inflation have painted an encouraging picture on the outlook for the country's growth, with the lack of price pressures easing concerns that the Federal Reserve may need to consider an early exit from aggressive quantitative easing. "It does feel that the markets are finding a bottom after quite an aggressive sell off," said Gayle Berry, analyst at Barclays. "Our view is that you will see a bottom continue to form over the next couple of week and then maybe get some modest upside in Q2 as Chinese demand starts to improve." Weighing on prices, however, was the high level of copper stocks, with inventories in warehouses monitored by the Shanghai Futures Exchange rising 2.9 percent from last Friday, the exchange said on Friday. ShFE and LME copper stocks have climbed more than 200,000 tonnes, or more than a quarter of combined total stocks so far this year. "We see copper fully priced where it is at the moment," said analyst Matt Fusarelli at consultancy AME Group in Sydney. "We are expecting a surplus this year of copper and we are now up several hundred thousand tonnes since the start of the year, indicative of where the market is moving," he added. AME expects prices to ease over the second quarter and close the year around $3.20 a pound ($7,055-$7,275 a tonne).

CHINESE BUYING China's state stockpiler bought 300,000 tonnes of aluminium and 45,000 tonnes of zinc in two closed-door tenders on Friday, smelter sources said, although the move is not expected to lift domestic prices of the metals dramatically. China is the world's top consumer and producer of aluminium, whose domestic prices hover at nearly three-year lows, and zinc, whose prices at home stand near their lowest in four months, but the purchase is not expected to turn around China's aluminium market, which is currently oversupplied, the sources said. Benchmark aluminium rose to $1,982.50 from a last bid of $1,979 a tonne on Thursday, while zinc climbed at $1,980 from $1,976. Tin rose to $23,975 from Thursday's close of $23,925 while lead was at $2,248 from $2,248.50. Nickel climbed to $17,280 from Thursday's close of $17,225.

Metal Prices at 1020 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T

Metal Last Change Pct Move End 2012 Ytd Pct

move

COMEX Cu 353.30 0.60 +0.17 365.25 -3.27 LME Alum 1981.50 -0.50 -0.03 2073.00 -4.41 LME Cu 7808.50 8.50 +0.11 7931.00 -1.54 LME Lead 2247.00 -1.50 -0.07 2330.00 -3.56 LME Nickel 17279.00 54.00 +0.31 17060.00 1.28 LME Tin 23955.00 30.00 +0.13 23400.00 2.37 LME Zinc 1979.00 3.00 +0.15 2080.00 -4.86 SHFE Alu 14750.00 -5.00 -0.03 15435.00 -4.44 SHFE Cu* 57150.00 590.00 +1.04 57690.00 -0.94 SHFE Zin 15260.00 125.00 +0.83 15625.00 -2.34