* Alcoa cuts 147,000 T capacity at Brazilian smelters
* Second quarter seen as strong period for copper demand
* Copper due to post biggest weekly rise in 6 months
(Adds details, quotes; updates prices)
LONDON, March 28 (Reuters) - Aluminium climbed on Friday after U.S. producer Alcoa cut more capacity from an over-supplied market while copper hit its highest level in 2-1/2 weeks as speculation gathered pace that China could step in to stimulate its economy.
Three-month aluminium on the London Metal Exchange (LME) gained 1.37 percent to $1,761.75 a tonne and copper rose 1.66 percent to $6,671, its highest level since March 11.
Copper, used in power and construction, is up 2.9 percent so far this week and on track to post its biggest weekly rise in six months.
Aluminium was pushed higher when Alcoa Inc, the biggest U.S. aluminium producer, said it would cut 147,000 tonnes of capacity at two aluminium smelters in Brazil as increased costs and low prices have made the plants uncompetitive.
But Commerzbank analyst Daniel Briesemann was not upbeat about further price gains based on Alcoa's cuts alone.
"Aluminium prices can only go up if we see cuts in production and capacity on a large scale," he said.
"As long as some cuts are being outweighed by opening of new capacities in places such as the Middle East and other countries where power is cheap, then that doesn't make a difference to the entire market."
Aluminium has gained 5 percent since early February on consumer buying and news of other capacity cuts.
Premiums in aluminium have also been buoyant, including in Japan where premiums for April-June shipments were mostly set at a record high of $365-$370 per tonne, surging 43-45 percent from the previous quarter on higher overseas rates, five sources directly involved in the talks said on Friday.
In Europe, aluminium premiums, already at record levels, could gain more after a legal setback scuppered a reform by the LME aimed at freeing up metal more rapidly.
The court ruling in London on Thursday faulted the LME for failing to consult users on alternative ways to reduce vexing logjams in its warehousing network, the backbone of the world's biggest market for copper and aluminium.
Metals including copper received a boost after China's Premier Li Keqiang sought to reassure jittery global investors that Beijing was ready to support the cooling economy. He said the government had the necessary policies in place and would push ahead with infrastructure investment.
China's factory activity is expected to have picked up slightly in March, a Reuters poll showed, in a rare piece of good news, though the figure is unlikely to alter views that the world's second-largest economy is facing a slow first quarter.
China is the world's largest consumer of copper, accounting for around 40 percent of global refined demand.
"There has got to be some stimulus in China as growth has fallen even more than the government wanted. That will help copper," said Robin Bhar, analyst at Societe Generale.
"The second quarter is traditionally a strong period. China is slowing but it is still consuming copper. Spot buying should pick up and bonded stocks should decline."
Worries about unravelling Chinese demand have kept investors on edge since a bond default by a Chinese solar panel maker this month drove copper prices to the lowest since July 2010.
But warmer weather has begun to boost orders from construction and manufacturing sectors, buttressing prices, while China's leaders have pledged to step in to support growth.
"I see no signs to backtrack on a base case of moderately healthy demand in China this year," said analyst Joel Crane of Morgan Stanley in Melbourne.
Three month LME copper
Most active ShFE copper
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($1 = 6.1781 Chinese yuan)
(Additional reporting by Melanie Burton in SYDNEY; Editing by Pravin Char)