METALS-Copper flat as China data offsets demand concerns

* China Q3 GDP up 8.9 percent as expected, most metals output up

* Rising inventories hint at weak demand outside China

* Dollar recovers from 14-month lows after China data

LONDON, Oct 22 - Copper struggled for direction on Thursday as upbeat Chinese economic data offset a rebound in the dollar and worries that prices had run ahead of fundamentals.

At 1416 GMT, copper for three-months delivery on the London Metal Exchange traded at $6,581 a tonne from a close of $6,590 on Wednesday, when the metal used in power and construction hit $6,665, its highest since September last year.

Offering support, China's annual economic growth quickened to 8.9 percent in the third quarter, as expected and refined copper output in the world's largest metals consumer rose to a record 394,800 tonnes in September.

"It's fairly clear that demand outside China is still pretty lacklustre," said Dan Smith, a metals analyst at Standard Chartered. "The recent Chinese data has been pretty upbeat overall...we've become more bullish on China in the last month."

"It will be quite choppy in 2010, but generally we see prices trend higher," Smith added. "This is due to a general macro improvement, continued interest in commodities from investors and improvements in OECD countries."

Chinese refined production of zinc, nickel and primary aluminium also increased and industrial production rose to 13.9 percent in September from a year ago.

"The data painted a robust picture of demand in China and taken in conjunction with supply-side issues there's still a very persuasive story in copper, even without signs of recovery in Europe," said Nicholas Snowdon, analyst at Barclays Capital.

China is also the world's largest metals consumer.

But weighing on metal prices, the dollar rose broadly as a slide in global share prices cooled risk demand. A stronger dollar makes dollar-priced metals more expensive for non-U.S. investors.

Investors also eyed developments at Chile's Spence copper mine, where workers plan to resume wage talks with owner BHP Billiton to solve a nine-day strike, while worker's at Chile's Andina copper mine demanded a five percent wage hike to owner Codelco.

As well as production disruptions, analysts said the current labour talks would give clues as to future industry talks.

Copper prices have more than doubled this year supported by fund flows, economic data signalling recovery, a struggling dollar and record Chinese imports in the first half.

But more recently rising inventories on the London Metal Exchange capped further price gains as the demand outlook remained cloudy.

Latest LME data showed copper stocks rose 1,525 tonnes to total 364,075 tonnes, the highest since mid-May and up more than 50 percent since the middle of July.

ZINC JUMPS

In other metals, zinc, used to galvanize steel, was boosted by prospects for increased demand in China.

"Zinc has firmer premiums. It is one of the metals that stands to gain most leverage from fiscal stimulus in China. Investment in infrastructure ... in September was a key source of support for galvanised steel," said Snowdon.

Three-month LME zinc rose to $2,265 a tonne, the highest since May 2008 but then traded at $2,235.25 versus $2,235 on Wednesday.

Among other industrial metals, aluminium traded at $1,969.25 from $1,966, having earlier hit a 2-month high of $1,999.75 while battery material lead traded at $2,405.25 from $2,445.

Tin traded $14,500 from $14,450, and steel-making ingredient nickel was at $19,440 from $19,735.

Metal Prices at 1418 GMT Metal Last Change Percent Move End 2008 Ytd Percent

move COMEX Cu 299.50 -3.15 -1.04 139.50 114.70 LME Alum 1963.00 -3.00 -0.15 1535.00 27.88 LME Cu 6580.00 -10.00 -0.15 3060.00 115.03 LME Lead 2398.00 -47.00 -1.92 999.00 140.04 LME Nickel 19380.00 -355.00 -1.80 11700.00 65.64 LME Tin 14425.00 -25.00 -0.17 10700.00 34.81 LME Zinc 2230.00 -5.00 -0.22 1208.00 84.60 SHFE Alu 14985.00 20.00 +0.13 11540.00 29.85 SHFE Cu* 50460.00 430.00 +0.86 23840.00 111.66 SHFE Zin 16445.00 240.00 +1.48 10120.00 62.50 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07