* Chinese buying said to be coming to an end * Aluminium cancelled stock warrants jump (Updates official prices) By Pratima Desai and Michael Taylor LONDON, June 24 (Reuters) - Copper rose on Wednesday, but analysts expect fresh losses as the market acknowledges that recent gains have been built on the quicksand of Chinese demand. Copper used in power and construction is down nearly 10 percent since hitting an eight-month high of $5,388 a tonne earlier this month. Gains were based on Chinese buying for stockpiles, buying which shows signs of ending. At 1249 GMT, three-month copper on the London Metal Exchange traded at $4,994 a tonne compared with $4,805 at the close on Tuesday. Wednesday's gains were triggered by dollar weakness, which makes commodities priced in the U.S. currency cheaper for holders of other currencies, ahead of a policy statement from the U.S. Federal Reserve. The dollar recovered some poise later on Wednesday, but it is still weak compared with levels seen in March and April. "The dollar is helping industrial metals today," said Barbara Lambrecht, analyst at Commerzbank. "We stick to our view that we will see a further correction for copper prices because Chinese buying is coming to an end." Some analysts think China's State Reserves Bureau could in fact be selling copper back into the domestic market. China is the world's largest consumer of copper, accounting for about 30 percent of total demand. News that a rebound in Japanese exports slowed in May as shipments to China deteriorated and U.S. demand remained weak also added to the gloomy outlook. "Concerns about the global economy have resurfaced and this has hit base metals hard," Barclays Capital said in a note. PHENOMENON However, supporting copper prices were some expectations that the copper market surplus this year may not be as high as previously expected. That is reinforced by falling stocks. Stocks of copper in LME warehouses at seven-month lows around 275,000 tonnes compare with levels around 500,000 tonnes earlier this month. Much of the difference has made its way to Chinese state reserves and consumer stockpiles. Analysts say buying by China's SRB for the country's stockpiles is also a phenomenon in the aluminium market. Material heading towards China is reflected in the cancelled warrants or material already earmarked for delivery, which jumped to above 158,000 tonnes on Tuesday from near 100,000 tonnes on Monday. "Strategic buying by the SRB in China is supporting aluminium prices as are higher energy costs," Lambrecht said. Power is estimated to account for about one-third of aluminium smelting costs. Also helping to shore up aluminium are worries about a nearby shortage as many companies with metal are using it as collateral to release cash tied up in stocks. "As much as 75 percent of total stocks (are) tied up in financing deals," Calyon said in a note. But in the longer term, the overhang of stocks -- near record levels above 4.35 million tonnes -- will dampen sentiment as will doubts about demand from the transport and packaging industries. Aluminium traded at $1,661 a tonne from $1,605 and zinc at $1,580 from $1,519. Nickel rose more than 6 percent to a high of $15,500 a tonne versus $14,610, as traders said the metal was tracking copper higher with additional support from fund buying. It was last at $15,406. Lead gained to $1,680 from $1,620, while tin was traded at $14,800 from $14,550 on Tuesday. Metal Prices at 1255 GMT Metal Last Change Percent Move End 2008 Ytd Percent move COMEX Cu 219.40 0.00 +0.00 139.50 57.28 LME Alum 1651.00 46.00 +2.87 1535.00 7.56 LME Cu 4976.00 171.00 +3.56 3060.00 62.61 LME Lead 1673.00 53.00 +3.27 999.00 67.47 LME Nickel 15275.00 665.00 +4.55 11700.00 30.56 LME Tin 14725.00 175.00 +1.20 10700.00 37.62 LME Zinc 1573.00 54.00 +3.55 1208.00 30.22 SHFE Alu 13430.00 140.00 +1.05 11540.00 16.38 SHFE Cu* 39060.00 720.00 +1.88 23840.00 63.84 SHFE Zin 13390.00 205.00 +1.55 10120.00 32.31 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

Source