METALS-LME aluminium stays near 4-1/2-month lows as inventories weigh
* Rio Tinto weighing fate of Gove alumina refinery in Australia
* Shfe aluminium sinks to two-month low of 14,070 yuan a tonne
* Coming Up: U.S. housing starts, building permits at 1330 GMT
(Adds analyst's comments, updates prices)
SINGAPORE, Nov 26 (Reuters) - London Metal Exchange (LME) aluminium stayed near four-and-a-half-month lows hit in the previous session on Tuesday amid worries a change in LME rules could push supply from bulging inventories on to the market.
London copper was little changed, having slipped from near two-week highs hit in the previous session, underpinned by a shortfall in physical metal.
"Aluminium, of all the base metals, is facing some of the bigger headwinds given all the supplies tied up in warehouses, and the new proposed changes in LME rules," said James Glenn, economist at National Australia Bank (NAB) in Melbourne.
"It's probably the majority view that you're going to get an increase in physical supply. At the moment that is driving prices lower," he added.
LME stocks of aluminium are within reach of record highs, at 5.4 million tonnes, with similar volumes thought to be held outside exchange inventories, built up in the wake of the 2008 credit crisis. <0#MALSTX-LOC-GRD>
But the aluminium has not been freely available to market due to investor demand and because of huge bottlenecks that have delayed delivery by a year or more in some locations.
The LME, the world's biggest industrial metals marketplace, announced a tougher warehouse policy earlier in November to cut queues for delivery to a maximum of 50 days from over a year in some cases, after persistent complaints and a string of lawsuits from metal buyers.
Ratings agency Fitch said mid-month that the LME's shake-up of warehousing rules will probably push aluminium prices down in the short term, but will aid the market in the long term by removing distortion.
LME aluminium prices traded flat at $1,775 a tonne on Tuesday, having dropped to as low as $1,768 a tonne on Monday, the lowest since July 5.
In Shanghai, the most active February aluminium contract fell to 14,070 yuan ($2,300) a tonne, a two-month low.
Rio Tinto said on Tuesday it is reviewing the future of its Gove alumina refinery in Australia in light of worsening market conditions, and said it has decided not to convert the plant to use gas-fired power.
Russian metals and mining stocks rose on Monday amid speculation a meeting between Prime Minister Dmitry Medvedev and the world's top aluminium maker Rusal, as well as Mechel and Evraz could help the heavily indebted companies.
In other metals, LME copper had edged down 0.3 percent to $7,079 a tonne by 0300 GMT, after finishing barely changed in the previous session. Copper prices on Monday hit the highest since November 12 at 7,140 a tonne, rebounding from three-month lows of $6,910 tipped last week.
Nearby supplies of copper remain tight in Asia after delayed shipments from a typhoon-hit smelter in the Philippines, although they eased a little yesterday. Cash copper traded at a $1.50 discount to the benchmark contract, from a premium of $4 last week. <CMCU0-3>
On the complex as a whole, uncertainty over the scale and timing of plans by the United States to taper its huge bond-buying program was also acting to confine metals in range, Glenn of NAB said, with more clarity not expected until the new year when issues over the U.S. debt ceiling had also been sorted.
More immediately, markets are expected to quieten down ahead of the U.S. Thanksgiving holiday on Thursday.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin ($1 = 6.0926 Chinese yuan)
(Editing by Joseph Radford and Muralikumar Anantharaman)