By Anna Stablum LONDON, Nov 21 (Reuters) - Aluminium and copper touched new 3-year lows before recovering on bargain hunting on Friday, but another rise in warehouse stocks and concerns over future demand for industrial metals capped any major advances. Markets bounced after European stock markets firmed in volatile trading with mining shares taking the lead on Britain's main share index, the FTSE 100 .FTSE and many mining companies were among the ten biggest gainers. .PG.FTSE London-listed Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz), Vedanta (VED.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) and BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) rose more than 7 percent. "It was another day yesterday of very sharp falls for all of the base metals to levels that may now have attracted a little bit of buying," analyst Gayle Berry at Barclays Capital said. Technical buying was taking advantage of the price dips. "But from a fundamental perspective things still look very ugly for at least the next couple of quarters," Berry said. Copper prices in London are down almost 10 percent so far this week on worries about demand, following weak housing data, problems in the auto sector, dismal jobs data and a slump in U.S. equities to their lowest in a decade. Copper MCU3 for three-months delivery on the London Metal Exchange fell to $3,375 per tonne, its lowest since July 2005 before trading at $3,515 by mid-session compared with Thursday's close of $3,480. The metal fell around 3 percent on Thursday. By looking at historical data the copper price could fall as far as $2,000 per tonne, analyst Michael Widmer at BNP Paribas said in a note. "Production costs come with caveats. Yet, they can be a broad guideline for a bottom in metals quotations, as producers are unable to operate sustainably with negative margins," he said. One of the main difficulties when looking at production costs is that they have come down together with a general fall in commodity prices, in particular energy costs for miners. "Freight, energy and iron ore costs are falling, so production costs are like a moving target," Berry said, adding that as the components of those costs begin to fall so does the price floor for the various metals. Inventories of copper, used widely in power and construction, are currently at 283,125 tonnes, having risen around 20 percent so far in November. Stockpiles in Shanghai Futures Exchange warehouses fell 3,797 tonnes, or 18 percent, to 17,699 tonnes, more than expected, but not enough to offset rising stocks and a growing surplus in the international market. [ID:nBJD000449] The International Copper Study Group (ICSG) reported the world refined copper market saw a surplus of 74,000 tonnes between January and August this year, versus a surplus of 22,000 tonnes in the year-ago period. [ID:nSP391524] The picture is grimmer in aluminium. Inventories rose 2,025 tonnes to more than 1.72 million -- the highest since December 1994, pushing the three-month price MAL3 to $1,765 per tonne, its weakest since July 2005. The metal, used in transport, power and packaging, traded at $1,801 per tonne, up $16 from Thursday. "The market is seeing some investors covering their short positions ahead of the weekend," an LME ring dealer said. Aluminium prices could find a price floor at around $1,600, said Widmer, when looking at the production cost for miners. The fate of U.S. car makers such as General Motors (GM.N: Quote, Profile, Research, Stock Buzz) and Ford Motor Company (F.N: Quote, Profile, Research, Stock Buzz) remain uncertain. Executives have gone cap-in-hand to Congress for $25 billion to keep them afloat, but congressional leaders demanded executives at the Big Three automakers come up with a detailed business survival plan in exchange for their support. [ID:nN20421931] [ID:nT41789] Battery material lead MPB3 was trading at $1,203 a tonne against $1,185/1,185.5 late on Thursday. Extreme nearby tightness sent the premium paid for cash material MPB0 to $200, after being bid as high as $250, for TOM/Next (tomorrow for delivery next day). Tin MSN3 bounced after falling 7.6 percent in the previous session and traded up 4.4 percent at $11,800 versus its close on Thursday of $11,300. Zinc MZN3 gained to $1,203 against $1,180 on Thursday when it dipped 4.3 percent. Nickel MNI3 was higher at $10,155/10,160 from $9,950 on Thursday, when the stainless steel ingredient shed 5.3 percent. Metal Prices at 1342 GMT Metal Last Change Pct Move End 2007 Ytd Pct move LME Cu 3570.00 90.00 +2.59 6670.00 -46.48 SHFE Cu* 26950.00 -740.00 -2.67 56880.00 -52.62 LME Alum 1802.00 17.00 +0.95 2403.00 -25.01 SHFE Alu* 13260.00 -155.00 -1.16 18180.00 -27.06 COMEX Cu** 156.85 0.00 +0.00 303.05 -48.24 LME Zinc 1199.00 19.00 +1.61 2370.00 -49.41 SHFE Zinc* 9425.00 80.00 +0.86 18950.00 -50.26 LME Nick 10225.00 275.00 +2.76 26350.00 -61.20 LME Lead 1219.00 -11.00 -0.89 2550.00 -52.20 LME Tin 11700.00 400.00 +3.54 16400.00 -28.66 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Reporting by Anna Stablum, editing by Sue Thomas)

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