METALS-Copper up on demand prospects, lead near 16-mth top

Trade subdued on account of U.S. holiday

*G20 comments reassure investors, lift equities

*Lead supply woes linger

LONDON, Sept 7 - Copper rose on Monday as firmer equities continued to boost the demand outlook, but last week's mixed U.S. payrolls data was seen as signalling a slow recovery and kept a cap on gains.

Lead held near its highest level in 16-months, still underpinned by worries over smelter shut-downs in China linked to pollution concerns, although there are indications the outages will be short-lived.

Copper for three-months delivery on the London Metal Exchange was at $6,345 a tonne at 0940 GMT from a close of $6,280 on Friday. The metal, which has more than doubled in price this year, saw reduced trade volumes on account of Monday's U.S. Labor Day holiday.

Lead was at $2,365 a tonne from $2,304. Earlier, the battery-material touched $2,380.25, just short of a 16-month peak of $2,387 hit on Friday.

"Equities, the dollar, specific economic indicators - the bulk of those features short term are almost universally positive," said Neil Buxton, managing director at GFMS Metals Consulting.

He added, however: "In the medium term there'll be reflection on whether all the optimisitic scenarios have been priced into a market that's more than doubled so far this year."

U.S. data on Friday showed recovery might be slow and protracted. Job losses fell to their lowest level in a year last month, but the unemployment rate jumped to a 26-year high.

Nevertheless, markets remain bouyant. Global shares rose on Monday after weekend comments from G20 finance ministers and central bankers that they will keep stimulus measures in place until recovery is entrenched. Also aiding copper was a weak U.S. dollar, which makes dollar-priced metals cheaper for non-U.S. investors.

In industry news, mine workers at BHP Billiton's Spence copper mine in Chile were due to start formal pay negotiations on Monday, having rejected an initial wage offer.

"Over the next three to four months, labour contracts that affect...up to 17 percent of forecast 2009 mine supply, will need to be renegotiated. Spence is the first major copper mine to enter negotiations and may provide a signal for other forthcoming negotiations," Macquarie said in a note.

LEAD SUPPLY WOES

Lead, which has risen over 20 percent in two weeks, remained underpinned by the Chinese authorities' move to shut down polluting smelters after a series of poisoning incidents.

However, MF Global is looking at a resistance target of $2,400 for lead, saying investors are uncertain what to make of news from China last week that authorities may reopen closed lead facilities as early as October. Zinc, a sister-metal to lead, was at $1,945 from $1,922, having surged to a 13-1/2 month high of $1,989.75 on Friday on fears China might shut down zinc smelters next.

Elsewhere, aluminium was at $1,860 from $1,850. Latest LME data showed stocks of the metal fell 4,825 tonnes but remained near a record 4.6 million tonnes.

Tin, used in electrical solder, was at $14,400 from $14,250, while steel-making ingredient nickel was at $17,800 from $17,650.

Latest LME data showed nickel stocks rose 504 tonnes to 117,144 - the highest level since April 1995.

Metal Prices at 0940 GMT Metal Last Change Percent Move End 2008 Ytd Percent

move COMEX Cu 286.50 2.15 +0.76 139.50 105.38 LME Alum 1855.00 3.00 +0.16 1535.00 20.85 LME Cu 6340.00 60.00 +0.96 3060.00 107.19 LME Lead 2365.00 61.00 +2.65 999.00 136.74 LME Nickel 17725.00 75.00 +0.42 11700.00 51.50 LME Tin 14200.00 -250.00 -1.73 10700.00 32.71 LME Zinc 1938.00 16.00 +0.83 1208.00 60.43 SHFE Alu 14960.00 -65.00 -0.43 11540.00 29.64 SHFE Cu* 49540.00 10.00 +0.02 23840.00 107.80 SHFE Zin 15550.00 -135.00 -0.86 10120.00 53.66 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07