METALS-LME copper hits 8-month low on demand worries

* Copper well above marginal production costs of $6,500-$7,000

* Aluminium hits 7-1/2 month low, more output loss-making

* India's Sterlite declares force majeure, could boost premiums

* Coming up: ECB decision at 1145 GMT, news conference 1230

(Adds details, quotes; previous SINGAPORE) LONDON, April 4 (Reuters) - Copper fell for the fifth straight session on Thursday, hitting its lowest level in eight months and analysts said more losses were likely as concern grew about high inventories and weak global demand, especially in top metals consumer China. Aluminium edged to a 7-1/2 month low and zinc fell to the lowest in five months. Three-month copper on the London Metal Exchange shed 0.3 percent to $7,365 per tonne by 1000 GMT after hitting a low of $7,331.25, its weakest since August 3. Volumes were thinner than usual due to China being closed for a two-day holiday. LME copper has lost nearly 12 percent since touching a four-month peak in early February of $8,346 and is down about 7 percent so far this year. Recent soft U.S. economic data on manufacturing and jobs has given more firepower to speculators targeting lower prices. At the same time, demand in China, which accounts for 40 percent of world copper consumption, has been disappointing. Stronger Chinese economic data, including recent numbers tracking factory activity, have failed to translate into physical metals demand. "I'm not convinced we're going to see significant growth... the fact that markets are waiting for some China miracle, they might well be underwhelmed," said analyst David Wilson at Citigroup in London. Copper prices were still well above marginal production costs, so there was still scope on the downside, Wilson added. "We'd say marginal production costs in copper are at around $6,500 to $7,000 a tonne, so there's still some way down to go, particularly if we continue to see LME inventories rise." LME copper inventories <MCUSTX-TOTAL> rose another 6,850 tonnes on Thursday to 579,175 tonnes, the highest in a decade. While Wednesday's weak U.S. jobs data raised concerns about another set of payroll numbers on Friday, some analysts were more sanguine. "Going forward, probably the pace of improvement is going to slow because of the U.S. budget cuts, but things do not look as bleak as current price action would suggest," said analyst Stefan Graber of Credit Suisse in Singapore.

Friday's payrolls report is expected to show that U.S. employers likely hired at a moderate pace in March, suggesting the economy is gathering momentum despite the onset of across-the-board federal spending cuts. In a move that could tighten local supplies and force imports and raise premiums for copper in Asia, Sterlite Industries Ltd has halted deliveries of copper from India's largest smelter after it shut down last week due to complaints over emissions.

ALUMINIUM FINDS FLOOR? The fall in aluminium prices may have run out of steam since they have hit levels that are creating more pain for producers, Wilson said. "Maybe aluminium has found a floor. Even if you add in the high physical premiums, current prices suggest a big chunk of production is not going to break even." Three-month aluminium inched down to a low of $1,863 a tonne, the weakest since Aug. 22, and was down 0.4 percent at $1,864.50. Zinc managed to rebound after touching a low of $1,849 a tonne, the weakest since Nov. 5, rising 0.3 percent to $1,863. Nickel also rose, gaining 0.12 percent to $16,125 a tonne after touching a low of $15,980, the lowest since Nov. 16. Lead declined 0.2 percent to $2,046 a tonne and tin was barely changed, down 0.04 percent to $22,692.

PRICES Metal Prices at 1104 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 332.35 -0.95 -0.29 365.25 -9.01 LME Alum 1864.50 -19.50 -1.04 2073.00 -10.06 LME Cu 7365.00 -21.50 -0.29 7931.00 -7.14 LME Lead 2046.00 -4.00 -0.20 2330.00 -12.19 LME Nickel 16119.00 14.00 +0.09 17060.00 -5.52 LME Tin 22651.00 -49.00 -0.22 23400.00 -3.20 LME Zinc 1863.25 6.25 +0.34 2080.00 -10.42 SHFE Alu 14565.00 -5.00 -0.03 15435.00 -5.64 SHFE Cu* 54070.00 -270.00 -0.50 57690.00 -6.27 SHFE Zin 14520.00 -145.00 -0.99 15625.00 -7.07 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN

SHFE ZN began trading on 26/3/07

(Additional reporting by Melanie Burton; editing by Jason Neely)