METALS-Copper trims gains as equities turn lower

* Copper loses early momentum on reversal in equities

* China refined copper imports down from December record

* Aluminum hits lowest since October 2002 (Recasts, updates with U.S. closing prices, comments; adds NY dateline/byline)

NEW YORK/LONDON, Feb 23 - Copper prices ended higher Monday, but off their best levels, as a rebound in the dollar and drop in global equity markets sapped early strength in the metal and helped keep prices pinned near the bottom of their range.

Aluminum prices fell to $1,285 a tonne, their lowest level since late 2001, as inventories hit a record high and the troubles blighting the auto industry intensified.

Equity markets reversed course after an initial burst higher on expectations the U.S. government will increase its stake in Citigroup, instead of fully nationalizing it.

The report helped push the price of copper up nearly 5 percent.

"Any time you see the possibility of improved economic activity, that's going to lend some support to the copper," said Frank Lesh, a broker and futures analyst with Future Path Trading in Chicago.

Copper for March delivery on the New York Mercantile Exchange's COMEX division ended up 2.10 cents at $1.4370 a lb.

Last week, the benchmark March contract dropped to its lowest level since Jan. 23 at $1.3950.

"Clearly, we did reach some oversold levels, but really it feels like we're just carving out a range at the lower end of things," Lesh said.

On the London Metal Exchange, copper for three-month delivery rose as high as $3,305 a tonne before closing at $3,231, up from $3,150 a tonne on Friday.

"It is engendering a slightly more positive feel to the overall financial environment," Barclays Capital's Kevin Norrish said of Citigroup. "But (the economic outlook) looks very grim ... people's view on the global economy seems to be getting worse by the hour."

DEMAND WEAK

Stocks of copper in LME warehouses fell 950 tonnes, but stand at 544,650 tonnes, their highest in more than five years.

"Things haven't really changed fundamentally in terms of demand being non-existent," Robin Bhar, an analyst at Calyon, said.

Low demand has caused copper prices to collapse by about 60 percent since July, when they struck a record $8,940 a tonne.

China's imports of refined copper in January fell 14.7 percent from December's record. But imports surged 41 percent from a year earlier.

"Some of the factories in China think that the current price is very low, so they are building up their stocks," said Shao Hebin, an analyst at Great Wall Futures.

Low prices and slumping demand have forced China's central government to buy metals as reserves, as part of Beijing's plans to support smelters during the current slowdown.

Industry sources said last week China's State Reserve Bureau might already have contracted for up to 240,000 tonnes of refined copper imports as part of a plan to buy 300,000 tonnes.

The picture in aluminum, used in transport, packaging and construction, is equally gloomy, analysts said. Three-month aluminum closed at $1,288 a tonne, down from Friday's $1,305.

Stocks of the energy-intensive metal are at a record 3.16 million tonnes, up 35 percent since the end of December.

Zinc closed at $1,098 a tonne, down from Friday's close at $1,105 a tonne. Key stainless steel ingredient nickel ended at $9,550 a tonne, up from Friday's closing bid of $9,495 a tonne.

Battery material lead closed at $1,020 a tonne, down from $1,030, and tin fell to $10,405 from $10,525 a tonne.