METALS-Copper rebounds from 2-month low helped by weak dollar

* Trading volumes low as hurricane hits the U.S.

* Aluminium stocks rise as output grows quicker than demand

* Euro rises vs dollar on good demand at Italian debt auction

LONDON, Oct 30 (Reuters) - Copper rose on Tuesday, rebounding from a near 2-month low hit in the previous session, supported by a weak dollar and some cautious industrial buying, but concerns about sluggish demand from top consumer China capped further gains. Three-month copper on the London Metal Exchange (LME) rose to $7,733.50 a tonne at 1610 GMT, recovering from a near 2-month low of $7,670 on Monday, when it closed at $7,699. Trading volumes were low however, as Sandy, one of the biggest storms ever to hit the U.S., forced evacuations and shut down transportation. Boosting metals prices was a rise in the euro against the dollar, after data showed the Spanish economy contracted slightly less than expected in the third quarter and as demand for Italian bonds improved at an auction. A weak dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies. With prices of most metals near 2-month lows on Monday, some industrial buyers had been tempted, traders and analysts said. ``We are seeing a bit more buying interest from consumers at this sort of price levels but we still see copper physical demand as relatively soft,'' Standard Chartered analyst Daniel Smith said. ``I don't think demand in China has got any worse, but people are recognising that growth in quite soft. Realism is starting to sink in.'' Prices for the metal rallied nearly 8 percent in September, fuelled by the third round of quantitative easing (QE) by the U.S. Federal Reserve, the promise of bond buying by the European Central Bank (ECB) and stimulus measures in Japan and China. Copper then weakened in October as expectations that real demand for metals would improve failed to materialise. It is down close to 6 percent in October and is trading up just 1.7 percent in the year to date.

RISING STOCKS Fundamentals have turned a bit weaker for base metals, as slower economic growth in China weighed on its metals demand, and with metals stocks rising, especially for aluminium and copper, Benchmark aluminium rose to $1,909 a tonne, from $1,897 on Monday. Stocks of aluminium in warehouses monitored by the LME and by the Shanghai Futures Exchange (ShFE) have built up significantly in the last few weeks. Bonded stocks of aluminium in China have also increased noticeably, a trend which is not likely to reverse anytime soon as new smelters bring additional capacity on stream, analysts added. ``The rise in stocks is due to the pace of growth in local production significantly outstripping the pace of growth in demand,'' Commerzbank said in a research note. Hurt by low prices for aluminium and rising costs, China's top aluminium maker Aluminium Corp of China Ltd, Chalco< posted its fourth straight quarterly net loss in the third quarter.

Battery material lead was at $2,038 from Monday's close of $2,007.50. Lead backwardation, or premium of the cash contract against the three-month contract, widened to $4 per tonne from $0.5 on Monday, as battery makers sought scarce supplies of the metal ahead of the peak winter battery replacement season. Tin rose to $19,865 from $19,555 while zinc climbed to $1,845.50 from $1,825. Stainless steel material nickel was at $15,980 from $15,950.

Metal Prices at 1608 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T

Metal Last Change Pct Move End 2011 Ytd



COMEX Cu 350.85 1.40 +0.40 344.75


LME Alum 1909.00 -29.00 -1.50 2020.00


LME Cu 7729.25 30.25 +0.39 7600.00


LME Lead 2038.25 30.75 +1.53 2034.00


LME Nickel 15990.00 40.00 +0.25 18650.00


LME Tin 19800.00 245.00 +1.25 19200.00


LME Zinc 1843.25 18.25 +1.00 1845.00


SHFE Alu 15285.00 -85.00 -0.55 15845.00


SHFE Cu* 56480.00 -200.00 -0.35 55360.00


SHFE Zin 14680.00 -5.00 -0.03 14795.00


** Benchmark month for COMEX copper

* 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07