AB: METALS Copper slips from near 3-wk high; dollar weighs
* Weaker share prices, dollar strength weigh
* Copper slips after hitting highest level since May 8
* Aluminum stocks continue to climb
LONDON, May 27 - Copper slipped from a near three-week high on Wednesday, as a firmer dollar and weaker share prices weighed on sentiment, with investors taking little comfort from stronger than expected U.S. housing data.
Copper for three month delivery on the London Metal Exchange was trading at $4,626 a tonne by 1534 GMT, down more than half a percent from Tuesday's close at $4,660. It earlier hit a session high of $4,725.
Data released earlier showed the pace of U.S. existing home sales rose a slightly stronger than forecast 2.9 percent in April..
The dollar lengthened gains against the euro after the data. The single currency had already been knocked on comments from a European Central Bank policymaker suggesting further interest rate cuts could not be ruled out.
A stronger dollar makes metals traded in the U.S. currency more expensive for non-U.S. investors.
Analysts said base metals were struggling to gain traction after surging earlier this year, with persistent concerns about demand outside of China vying against bets about stabilisation of the global economic downturn.
Metals rallied on Tuesday after figures showed U.S. consumer confidence soared in May to its highest level in eight months as the strain on the labour market showed some signs of easing.
"Anything that is being seen as vaguely positive pushes markets up," said David Wilson, director of metals research at Societe Generale. "We've definitely seen the bottom but my concern is whether we're seeing a sustainable recovery or just a re-stocking drive."
Prices of copper, used in power and construction, have gained about 50 percent this year as strong Chinese buying sparked a rise in cancelled warrants -- material earmarked for delivery -- on the London Metals Exchange.
However, the stock drawdowns seem to be running out of steam.
On Tuesday, cancelled warrants fell to 43,375 tonnes from 47,625 tonnes on May 22, but offering further support for copper, LME inventories fell 7,300 tonnes to 319,275 tonnes.
BHP Billiton voiced uncertainty about the sustainability of Chinese buying.
Aluminium fell to $1,410 a tonne from $1,452. The relentless rise in LME stocks continued, jumping 9,700 tonnes to a new record above 4.21 million tonnes.
Aluminium cancelled warrants were at 50,250 tonnes on May 26 compared with 47,725 tonnes on May 22.
"Aluminium stocks are over four million and there could be another one million to add to that, so why buy aluminium," an LME trader said.
Used in transport and packaging, aluminium has come under pressure in recent months on downbeat data from auto makers.
Highlighting this, General Motors Corp's board will meet to review options for the struggling automaker after confirming a crucial bond exchange had fallen far short of its goal to cut debt and avoid bankruptcy.
Steel making ingredient nickel was last bid at $13,425 from $13,400 but also touched a high of $13,900 -- its highest level since Oct. 8. Zinc traded at $1,474 a tonne versus $1,500. On Tuesday, cancelled nickel warrants were 6,492 tonnes from 7,614 tonnes on May 22, while LME stocks fell 954 tonnes to 108,642 tonnes.
In April, Chinese nickel imports hit a monthly record of 21,031 tonnes, while LME nickel stocks have fallen sharply since late April, when they reached above 114,400 tonnes.
Analysts said nickel was supported by a slow trickle of re-stocking by Chinese steel mills, although speculative stockbuilding could also be a factor.
"Stainless steel producers really stepped away from the market in the last quarter of last year but they've run down inventories strongly now," said David Thurtell, an analyst with Citigroup. "There's definitely signs consumers are buying on dips."
Battery material lead was at $1,445, flat on the day and tin edged up to $13,775 from $13,600.
Worries about lead and tin supplies remain due to a dominant position controlling between 50 and 80 percent of cash warrants on LME stocks.
Metal Prices at 1534 GMT Metal Last Change Percent Move End 2008 Ytd Percent
