METALS-Copper rises on U.S. data; prices defy fundamentals

* Fundamentals, demand concerns dog market

* U.S. data helps buoy recovery hopes

* Chinese lead production a worry, more closures possible

LONDON, Aug 27 - Copper rose on Thursday as the market took encouragement from U.S. data that lifted hopes of economic recovery, but analysts warned prices had exceeded weak fundamentals.

Copper for three-month delivery on the London Metal Exchange was at $6,312.75 a tonne at 1346 GMT from $6,291 at the close on Wednesday and compared with a session low at $6,251.

Data showed the U.S. economy contracted more slowly than expected in the second quarter, helped by smaller declines in consumer spending.

"It is good for metals to see the consumer coming back on line, spending a little more," said Justin Lennon, an analyst at Mitsui Bussan Commodities in New York. "This little bounce up we've had is probably based on improving personal consumption numbers." The number of U.S. workers filing new claims for jobless benefits fell last week, government figures showed, also helping boost hopes of recovery.

News that London-listed Xstrata would suspend its copper operations at the Kidd Metallurgical Site in Canada due to a shortage of concentrate would reinforce bullish sentiment, analysts said.

Copper, used in power and construction, has more than doubled in price this year, in part due to Chinese stockpiling.

But some analysts have warned that industrial metal prices are trading at a speculative premium compared with weak fundamentals, and there could be price corrections.

Highlighting weak demand, copper stocks rose 1,150 tonnes to 297,550 tonnes, the highest level since early June.

Glencore International, the world's biggest commodity trader, said on Thursday that income and revenues fell in the first half of 2009.

UNDER SCRUTINY

Battery material lead remained under scrutiny, following the closure of smelters by Chinese authorities over health concerns.

Lead was at $2,045 from $2,050 and zinc slipped to $1,840 a tonne from $1,846.

Tension and unrest are growing in China as a lead poisoning scandal engulfs a growing number of provinces, threatening further cuts in supply from the world's top producer of the metal.

"The biggest concern is still about the lead market because of the issues in China," one metals analyst said. "Coming out of the summer period, if those guys are not operating, it clearly makes a difference."

Lead prices have more than doubled this year, and analysts say the rally still has legs.

In other base metals, aluminium, used in transport and packaging, was at $1,875 from $1,868, having earlier fallen to a four-week low of $1,840.

Steel-making ingredient nickel was at $19,105 from $19,075 while tin traded at $14,000 from $13,825.

Worries remain about nearby supplies for both metals, which have pushed the premium for cash material over the three-month contract to around $31 and $220 a tonne respectively.

Tin investors remain concerned over the scale of long positions developing in the tin market, compared with the amount of available metal stored in LME warehouses.

For a nickel outlook from Finnish miner Talvivaara, click on

Metal Prices at 1354 GMT Metal Last Change Percent Move End 2008 Ytd Percent

move COMEX Cu 285.50 -0.05 -0.02 139.50 104.66 LME Alum 1870.00 2.00 +0.11 1535.00 21.82 LME Cu 6291.00 0.00 +0.00 3060.00 105.59 LME Lead 2035.00 -15.00 -0.73 999.00 103.70 LME Nickel 19100.00 25.00 +0.13 11700.00 63.25 LME Tin 13925.00 100.00 +0.72 10700.00 30.14 LME Zinc 1831.00 -15.00 -0.81 1208.00 51.57 SHFE Alu 14940.00 -90.00 -0.60 11540.00 29.46 SHFE Cu* 49660.00 -360.00 -0.72 23840.00 108.31 SHFE Zin 15150.00 -200.00 -1.30 10120.00 49.70 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07