METALS-Shanghai copper hits 1-wk low on dollar, demand concern

* Stronger dollar damps market sentiment

* Shanghai copper hits 1-week low

SHANGHAI, Oct 29 - Shanghai copper fell more than 2 percent on Thursday, pressured by a rebound in the U.S. dollar, as investors worried about the pace of recovery in the global economy and demand outlook for the industrial metal.

Shanghai's benchmark third-month copper futures contract fell 2.2 percent by 0215 GMT to 50,160 yuan ($7,347) a tonne, touching a one-week low of 50,000 yuan, following a 2.4 percent fall in London's copper prices in the previous session.

The three-month copper futures contract on the London Metal Exchange gained a modest $15 to $6,445 a tonne.

"A series of disappointing economic data from the U.S. indicates that the restocking process in the U.S. and Europe may not be going as rapidly as expected," said Liang Zhigang, an analyst at Star Futures.

U.S. housing data released on Wednesday disappointed with sales of newly built single-family homes unexpectedly down in September, recording their first decline since March, and the U.S. currency held firm near its highest in more than two weeks.

Inventories of copper at LME warehouses rose 1,075 tonnes to 371,725 tonnes, their highest level since May.

Copper prices have more than doubled this year mostly thanks to China's strong demand through the year, but the country's real demand for copper -- which showed a surprise 21 percent jump in apparent consumption in September -- is fraught with uncertainty.

"Copper consumption is much better from year-ago levels, but hasn't improved much from last month," said Liang of Star Futures.

"Consumption boosted by internal demand from construction and infrastructure is already running at very high levels, while consumption in the export sector is yet to increase. There won't be significant growth in consumption in absence of major improvement in export business."

Japanese industrial output rose for the seventh month running in September, the longest streak of gains in more than 12 years, as global stimulus measures led car and electronics makers to increase production.

On the macroeconomic front, Norway on Wednesday became Europe's first country to raise interest rates since the global financial crisis bit hard a year ago.

"The market is worried that more central banks would increase interest rates and tighten liquidity," said a Shanghai-based trader.

LME aluminium edged down $2 to $1,910 a tonne, after having touched $1904.5, lowest in more than a week. Shanghai aluminium fell 1 percent to 15,135 yuan a tonne.

Shanghai zinc fell 2.2 percent to 16,550 yuan a tonne, and LME zinc was flat at $2,190.

Nyrstar, the world's biggest zinc producer, said on Wednesday the zinc market was showing recovery signs driven by higher demand in the Chinese, European and U.S. steel industry, and was on track to cut costs. Base metals prices at 0215 GMT Metal Last Change Pct Move End 2008 Pct chg 09 LME Cu 6445.00 15.00 +0.23 3060.00 110.62 SHFE Cu* 50160.00 -1120.00 -2.18 23840.00 110.40 LME Alum 1910.00 -2.00 -0.10 1535.00 24.43 SHFE Alum* 15135.00 -155.00 -1.01 11540.00 31.15 COMEX Cu** 291.90 0.00 +0.00 139.50 109.25 LME Zinc 2190.00 0.00 +0.00 1208.00 81.29 SHFE Zinc 16550.00 -365.00 -2.16 10120.00 63.54 LME Nickel 17850.00 50.00 +0.28 11700.00 52.56 LME Lead 2240.00 9.00 +0.40 999.00 124.22 LME Tin 14525.00 -125.00 -0.85 10700.00 35.75 LME/Shanghai arb^ 1338 Dollar/yuan 6.8294 \ 6.8304 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month