(Adds comment, detail, updates prices) MELBOURNE, Aug 14 (Reuters) - London copper was little changed on Monday, holding below recent two-year peaks on a weaker dollar, as analysts flagged prospects of a correction given August's strong price gains and disappointing factory activity from China. China's factory output grew 6.4 percent in July from a year earlier, while fixed-asset investment expanded 8.3 percent in the first seven months, both below economists' forecasts.
"The metals sector remains even more vulnerable than other sectors (to a correction) due to the strong rally it has enjoyed over the past month," said ANZ in a report.
* LME COPPER: London Metal Exchange copper pared early gains to trade at $6,422.50 a tonne by 0304 GMT, up 0.2 percent, after closing slightly softer on Friday. Prices hit the highest in more than 2-1/2 years on Aug. 9 at $6,515 a tonne and are up by more than 8 percent this quarter.
* SHFE COPPER: Shanghai Futures Exchange copper traded up half a percent. LME Zinc and LME lead both traded up around 0.8 percent, while aluminium nickel and tin were a shade weaker.
* CHINA ALUMINIUM: China's aluminium output fell 8.2 percent in July from a record high a month earlier, data showed on Monday, as capacity cuts that have sent prices to multi-year highs start to take their toll on the country's output.
* STOCKS: Reflecting ample available supply, Shanghai aluminium and copper inventories surged, weekly inventory data on Friday showed. Shfe copper stocks have been rising since the start of August to hit the highest in two months above 200,000 tonnes.
* ALUMINIUM: Shfe aluminium stocks <AL-STX-SGH> which have been climbing all year, hit the highest since May 2013, at 473,000 tonnes, as traders stockpile metal in warehouses in case of winter cuts, encouraged by financable spreads.
* NICKEL: Nearby nickel <CMNIT-0> spreads blew out to $4.90 for tomorrow against next day delivery, while aluminium cash to three month spreads <CMAL0-3> have also sharply narrowed, suggesting shorts are likely to deliver against their positions where possible as the prime traded contract expires this week.
* ZAMBIA: Copperbelt Energy Corp (CEC), Zambia's main supplier of power for its mines, confirmed on Sunday that it has restricted the amount of electricity it supplies to Glencore unit Mopani Copper Mines (MCM) because of a dispute over tariffs.
* SPECULATORS: Hedge funds and money managers lifted their net long position in copper futures and options further to a fresh record, U.S. Commodity Futures Trading Commission data showed on Friday.
* COMING UP: Euro zone Industrial production for Jun at 0900 GMT
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Three month LME copper 6422.5 Most active ShFE copper 50330 Three month LME aluminium 2032.5 Most active ShFE aluminium 15855 Three month LME zinc 2919.5 Most active ShFE zinc 24145 Three month LME lead 2347 Most active ShFE lead 19125 Three month LME nickel 10650 Most active ShFE nickel 86740 Three month LME tin 20260 Most active ShFE tin 145410 LME/SHFE COPPER LMESHFCUc3 505.74 LME/SHFE ALUMINIUM LMESHFALc3 147.11 LME/SHFE ZINC LMESHFZNc3 945.38 LME/SHFE LEAD LMESHFPBc3 215.32 LME/SHFE NICKEL LMESHFNIc3 2460.58
(Reporting by Melanie Burton; Editing by Richard Pullin)